Correlation Between Strauss and Nova
Can any of the company-specific risk be diversified away by investing in both Strauss and Nova 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 Strauss and Nova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strauss Group and Nova, you can compare the effects of market volatilities on Strauss and Nova 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 Strauss with a short position of Nova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strauss and Nova.
Diversification Opportunities for Strauss and Nova
Poor diversification
The 3 months correlation between Strauss and Nova is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Strauss Group and Nova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova and Strauss 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 Strauss Group are associated (or correlated) with Nova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova has no effect on the direction of Strauss i.e., Strauss and Nova go up and down completely randomly.
Pair Corralation between Strauss and Nova
Assuming the 90 days trading horizon Strauss is expected to generate 15.65 times less return on investment than Nova. But when comparing it to its historical volatility, Strauss Group is 1.61 times less risky than Nova. It trades about 0.01 of its potential returns per unit of risk. Nova is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,460,000 in Nova on November 27, 2024 and sell it today you would earn a total of 5,938,000 from holding Nova or generate 171.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strauss Group vs. Nova
Performance |
| Timeline |
| Strauss Group |
| Nova |
Strauss and Nova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strauss and Nova
The main advantage of trading using opposite Strauss and Nova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strauss position performs unexpectedly, Nova 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 Nova will offset losses from the drop in Nova's long position.| Strauss vs. Shufersal | Strauss vs. Israel Discount Bank | Strauss vs. Bank Leumi Le Israel | Strauss vs. Azrieli 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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