Correlation Between Automatic Bank and Gilat Satellite
Can any of the company-specific risk be diversified away by investing in both Automatic Bank and Gilat Satellite 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 Automatic Bank and Gilat Satellite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Bank Services and Gilat Satellite Networks, you can compare the effects of market volatilities on Automatic Bank and Gilat Satellite 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 Automatic Bank with a short position of Gilat Satellite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Bank and Gilat Satellite.
Diversification Opportunities for Automatic Bank and Gilat Satellite
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Automatic and Gilat is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Bank Services and Gilat Satellite Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gilat Satellite Networks and Automatic Bank 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 Automatic Bank Services are associated (or correlated) with Gilat Satellite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gilat Satellite Networks has no effect on the direction of Automatic Bank i.e., Automatic Bank and Gilat Satellite go up and down completely randomly.
Pair Corralation between Automatic Bank and Gilat Satellite
Assuming the 90 days trading horizon Automatic Bank Services is expected to generate 0.96 times more return on investment than Gilat Satellite. However, Automatic Bank Services is 1.04 times less risky than Gilat Satellite. It trades about 0.09 of its potential returns per unit of risk. Gilat Satellite Networks is currently generating about 0.04 per unit of risk. If you would invest 133,145 in Automatic Bank Services on November 2, 2024 and sell it today you would earn a total of 125,855 from holding Automatic Bank Services or generate 94.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Automatic Bank Services vs. Gilat Satellite Networks
Performance |
| Timeline |
| Automatic Bank Services |
| Gilat Satellite Networks |
Automatic Bank and Gilat Satellite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Bank and Gilat Satellite
The main advantage of trading using opposite Automatic Bank and Gilat Satellite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Bank position performs unexpectedly, Gilat Satellite 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 Gilat Satellite will offset losses from the drop in Gilat Satellite's long position.The idea behind Automatic Bank Services and Gilat Satellite Networks pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Gilat Satellite vs. Elbit Systems | Gilat Satellite vs. Tower Semiconductor | Gilat Satellite vs. Kamada | Gilat Satellite vs. Delek Group |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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