Correlation Between Tel Aviv and Birman Wood
Can any of the company-specific risk be diversified away by investing in both Tel Aviv and Birman Wood 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 Tel Aviv and Birman Wood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tel Aviv 35 and Birman Wood and, you can compare the effects of market volatilities on Tel Aviv and Birman Wood 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 Tel Aviv with a short position of Birman Wood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tel Aviv and Birman Wood.
Diversification Opportunities for Tel Aviv and Birman Wood
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tel and Birman is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Tel Aviv 35 and Birman Wood and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birman Wood and Tel Aviv 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 Tel Aviv 35 are associated (or correlated) with Birman Wood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birman Wood has no effect on the direction of Tel Aviv i.e., Tel Aviv and Birman Wood go up and down completely randomly.
Pair Corralation between Tel Aviv and Birman Wood
Assuming the 90 days trading horizon Tel Aviv 35 is expected to generate 0.15 times more return on investment than Birman Wood. However, Tel Aviv 35 is 6.72 times less risky than Birman Wood. It trades about 0.25 of its potential returns per unit of risk. Birman Wood and is currently generating about -0.14 per unit of risk. If you would invest 218,986 in Tel Aviv 35 on August 30, 2024 and sell it today you would earn a total of 8,695 from holding Tel Aviv 35 or generate 3.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tel Aviv 35 vs. Birman Wood and
Performance |
| Timeline |
Tel Aviv and Birman Wood Volatility Contrast
Predicted Return Density |
| Returns |
Tel Aviv 35
Pair trading matchups for Tel Aviv
Birman Wood and
Pair trading matchups for Birman Wood
Pair Trading with Tel Aviv and Birman Wood
The main advantage of trading using opposite Tel Aviv and Birman Wood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tel Aviv position performs unexpectedly, Birman Wood 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 Birman Wood will offset losses from the drop in Birman Wood's long position.| Tel Aviv vs. Petrochemical | Tel Aviv vs. Nrgene Technologies | Tel Aviv vs. TAT Technologies | Tel Aviv vs. Orbit Technologies |
| Birman Wood vs. Ralco Agencies | Birman Wood vs. Danel | Birman Wood vs. Ram On Investments and | Birman Wood vs. Neto ME Holdings |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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