Correlation Between Tel Aviv and Carmit
Can any of the company-specific risk be diversified away by investing in both Tel Aviv and Carmit 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 Carmit 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 Carmit, you can compare the effects of market volatilities on Tel Aviv and Carmit 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 Carmit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tel Aviv and Carmit.
Diversification Opportunities for Tel Aviv and Carmit
Poor diversification
The 3 months correlation between Tel and Carmit is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Tel Aviv 35 and Carmit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmit 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 Carmit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmit has no effect on the direction of Tel Aviv i.e., Tel Aviv and Carmit go up and down completely randomly.
Pair Corralation between Tel Aviv and Carmit
Assuming the 90 days trading horizon Tel Aviv is expected to generate 1.84 times less return on investment than Carmit. But when comparing it to its historical volatility, Tel Aviv 35 is 2.97 times less risky than Carmit. It trades about 0.13 of its potential returns per unit of risk. Carmit is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 81,200 in Carmit on August 24, 2024 and sell it today you would earn a total of 35,300 from holding Carmit or generate 43.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.48% |
| Values | Daily Returns |
Tel Aviv 35 vs. Carmit
Performance |
| Timeline |
Tel Aviv and Carmit Volatility Contrast
Predicted Return Density |
| Returns |
Tel Aviv 35
Pair trading matchups for Tel Aviv
Carmit
Pair trading matchups for Carmit
Pair Trading with Tel Aviv and Carmit
The main advantage of trading using opposite Tel Aviv and Carmit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tel Aviv position performs unexpectedly, Carmit 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 Carmit will offset losses from the drop in Carmit's long position.| Tel Aviv vs. Technoplus Ventures | Tel Aviv vs. Silver Castle Holdings | Tel Aviv vs. Rapac Communication Infrastructure | Tel Aviv vs. Unicorn Technologies |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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