Correlation Between EN Shoham and SR Accord
Can any of the company-specific risk be diversified away by investing in both EN Shoham and SR Accord 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 EN Shoham and SR Accord into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EN Shoham Business and SR Accord, you can compare the effects of market volatilities on EN Shoham and SR Accord 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 EN Shoham with a short position of SR Accord. Check out your portfolio center. Please also check ongoing floating volatility patterns of EN Shoham and SR Accord.
Diversification Opportunities for EN Shoham and SR Accord
Almost no diversification
The 3 months correlation between SHOM and SRAC is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding EN Shoham Business and SR Accord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SR Accord and EN Shoham 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 EN Shoham Business are associated (or correlated) with SR Accord. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SR Accord has no effect on the direction of EN Shoham i.e., EN Shoham and SR Accord go up and down completely randomly.
Pair Corralation between EN Shoham and SR Accord
Assuming the 90 days trading horizon EN Shoham is expected to generate 1.87 times less return on investment than SR Accord. But when comparing it to its historical volatility, EN Shoham Business is 1.33 times less risky than SR Accord. It trades about 0.08 of its potential returns per unit of risk. SR Accord is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 259,630 in SR Accord on August 27, 2024 and sell it today you would earn a total of 125,170 from holding SR Accord or generate 48.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EN Shoham Business vs. SR Accord
Performance |
| Timeline |
| EN Shoham Business |
| SR Accord |
EN Shoham and SR Accord Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EN Shoham and SR Accord
The main advantage of trading using opposite EN Shoham and SR Accord positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EN Shoham position performs unexpectedly, SR Accord 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 SR Accord will offset losses from the drop in SR Accord's long position.| EN Shoham vs. Bank Hapoalim | EN Shoham vs. Israel Discount Bank | EN Shoham vs. Bezeq Israeli Telecommunication | EN Shoham vs. Elbit Systems |
| SR Accord vs. Bank Hapoalim | SR Accord vs. Israel Discount Bank | SR Accord vs. Bezeq Israeli Telecommunication | SR Accord vs. Elbit Systems |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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