Correlation Between Tel Aviv and Brainsway
Can any of the company-specific risk be diversified away by investing in both Tel Aviv and Brainsway 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 Brainsway 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 Brainsway, you can compare the effects of market volatilities on Tel Aviv and Brainsway 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 Brainsway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tel Aviv and Brainsway.
Diversification Opportunities for Tel Aviv and Brainsway
Very poor diversification
The 3 months correlation between Tel and Brainsway is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Tel Aviv 35 and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway 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 Brainsway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainsway has no effect on the direction of Tel Aviv i.e., Tel Aviv and Brainsway go up and down completely randomly.
Pair Corralation between Tel Aviv and Brainsway
Assuming the 90 days trading horizon Tel Aviv is expected to generate 3.06 times less return on investment than Brainsway. But when comparing it to its historical volatility, Tel Aviv 35 is 3.88 times less risky than Brainsway. It trades about 0.14 of its potential returns per unit of risk. Brainsway is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 84,000 in Brainsway on September 1, 2024 and sell it today you would earn a total of 92,100 from holding Brainsway or generate 109.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tel Aviv 35 vs. Brainsway
Performance |
| Timeline |
Tel Aviv and Brainsway Volatility Contrast
Predicted Return Density |
| Returns |
Tel Aviv 35
Pair trading matchups for Tel Aviv
Brainsway
Pair trading matchups for Brainsway
Pair Trading with Tel Aviv and Brainsway
The main advantage of trading using opposite Tel Aviv and Brainsway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tel Aviv position performs unexpectedly, Brainsway 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 Brainsway will offset losses from the drop in Brainsway's long position.| Tel Aviv vs. YH Dimri Construction | Tel Aviv vs. Electreon Wireless | Tel Aviv vs. B Yair Building | Tel Aviv vs. One Software Technologies |
| Brainsway vs. Israel China Biotechnology | Brainsway vs. Scope Metals Group | Brainsway vs. Storage Drop Storage | Brainsway vs. Suny Cellular Communication |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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