Correlation Between Retailors and Aerodrome
Can any of the company-specific risk be diversified away by investing in both Retailors and Aerodrome at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Retailors and Aerodrome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retailors and Aerodrome Group, you can compare the effects of market volatilities on Retailors and Aerodrome and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Retailors with a short position of Aerodrome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retailors and Aerodrome.
Diversification Opportunities for Retailors and Aerodrome
Modest diversification
The 3 months correlation between Retailors and Aerodrome is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Retailors and Aerodrome Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerodrome Group and Retailors is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Retailors are associated (or correlated) with Aerodrome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerodrome Group has no effect on the direction of Retailors i.e., Retailors and Aerodrome go up and down completely randomly.
Pair Corralation between Retailors and Aerodrome
Assuming the 90 days trading horizon Retailors is expected to generate 0.6 times more return on investment than Aerodrome. However, Retailors is 1.66 times less risky than Aerodrome. It trades about 0.22 of its potential returns per unit of risk. Aerodrome Group is currently generating about -0.36 per unit of risk. If you would invest 652,400 in Retailors on September 3, 2024 and sell it today you would earn a total of 79,200 from holding Retailors or generate 12.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retailors vs. Aerodrome Group
Performance |
| Timeline |
| Retailors |
| Aerodrome Group |
Retailors and Aerodrome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retailors and Aerodrome
The main advantage of trading using opposite Retailors and Aerodrome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retailors position performs unexpectedly, Aerodrome can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Aerodrome will offset losses from the drop in Aerodrome's long position.| Retailors vs. Nice | Retailors vs. The Gold Bond | Retailors vs. Bank Leumi Le Israel | Retailors vs. ICL Israel Chemicals |
| Aerodrome vs. Kvasir Education | Aerodrome vs. ICL Israel Chemicals | Aerodrome vs. Amanet Management Systems | Aerodrome vs. Meitav Trade Inv |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |