Correlation Between Tel Aviv and Electra Real
Can any of the company-specific risk be diversified away by investing in both Tel Aviv and Electra Real 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 Electra Real 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 Electra Real Estate, you can compare the effects of market volatilities on Tel Aviv and Electra Real 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 Electra Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tel Aviv and Electra Real.
Diversification Opportunities for Tel Aviv and Electra Real
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tel and Electra is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tel Aviv 35 and Electra Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electra Real Estate 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 Electra Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electra Real Estate has no effect on the direction of Tel Aviv i.e., Tel Aviv and Electra Real go up and down completely randomly.
Pair Corralation between Tel Aviv and Electra Real
Assuming the 90 days trading horizon Tel Aviv is expected to generate 3.1 times less return on investment than Electra Real. But when comparing it to its historical volatility, Tel Aviv 35 is 2.2 times less risky than Electra Real. It trades about 0.24 of its potential returns per unit of risk. Electra Real Estate is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 406,000 in Electra Real Estate on August 30, 2024 and sell it today you would earn a total of 51,500 from holding Electra Real Estate or generate 12.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tel Aviv 35 vs. Electra Real Estate
Performance |
| Timeline |
Tel Aviv and Electra Real Volatility Contrast
Predicted Return Density |
| Returns |
Tel Aviv 35
Pair trading matchups for Tel Aviv
Electra Real Estate
Pair trading matchups for Electra Real
Pair Trading with Tel Aviv and Electra Real
The main advantage of trading using opposite Tel Aviv and Electra Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tel Aviv position performs unexpectedly, Electra Real 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 Electra Real will offset losses from the drop in Electra Real's long position.| Tel Aviv vs. Petrochemical | Tel Aviv vs. Nrgene Technologies | Tel Aviv vs. TAT Technologies | Tel Aviv vs. Orbit Technologies |
| Electra Real vs. Azrieli Group | Electra Real vs. Israel Discount Bank | Electra Real vs. Alony Hetz Properties | Electra Real vs. Shufersal |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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