Correlation Between Retailors and Golan Plastic
Can any of the company-specific risk be diversified away by investing in both Retailors and Golan Plastic 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 Golan Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retailors and Golan Plastic, you can compare the effects of market volatilities on Retailors and Golan Plastic 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 Golan Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retailors and Golan Plastic.
Diversification Opportunities for Retailors and Golan Plastic
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Retailors and Golan is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Retailors and Golan Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golan Plastic 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 Golan Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golan Plastic has no effect on the direction of Retailors i.e., Retailors and Golan Plastic go up and down completely randomly.
Pair Corralation between Retailors and Golan Plastic
Assuming the 90 days trading horizon Retailors is expected to generate 1.98 times less return on investment than Golan Plastic. In addition to that, Retailors is 1.27 times more volatile than Golan Plastic. It trades about 0.14 of its total potential returns per unit of risk. Golan Plastic is currently generating about 0.36 per unit of volatility. If you would invest 100,000 in Golan Plastic on August 31, 2024 and sell it today you would earn a total of 18,000 from holding Golan Plastic or generate 18.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retailors vs. Golan Plastic
Performance |
| Timeline |
| Retailors |
| Golan Plastic |
Retailors and Golan Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retailors and Golan Plastic
The main advantage of trading using opposite Retailors and Golan Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retailors position performs unexpectedly, Golan Plastic 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 Golan Plastic will offset losses from the drop in Golan Plastic's long position.| Retailors vs. Nice | Retailors vs. The Gold Bond | Retailors vs. Bank Leumi Le Israel | Retailors vs. ICL Israel Chemicals |
| Golan Plastic vs. Arad | Golan Plastic vs. Alony Hetz Properties | Golan Plastic vs. Danel | Golan Plastic vs. Airport City |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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