Correlation Between Tel Aviv and Endymed
Can any of the company-specific risk be diversified away by investing in both Tel Aviv and Endymed 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 Endymed 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 Endymed, you can compare the effects of market volatilities on Tel Aviv and Endymed 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 Endymed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tel Aviv and Endymed.
Diversification Opportunities for Tel Aviv and Endymed
Modest diversification
The 3 months correlation between Tel and Endymed is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Tel Aviv 35 and Endymed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endymed 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 Endymed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endymed has no effect on the direction of Tel Aviv i.e., Tel Aviv and Endymed go up and down completely randomly.
Pair Corralation between Tel Aviv and Endymed
Assuming the 90 days trading horizon Tel Aviv 35 is expected to generate 0.2 times more return on investment than Endymed. However, Tel Aviv 35 is 5.12 times less risky than Endymed. It trades about 0.13 of its potential returns per unit of risk. Endymed is currently generating about 0.02 per unit of risk. If you would invest 201,941 in Tel Aviv 35 on August 29, 2024 and sell it today you would earn a total of 25,740 from holding Tel Aviv 35 or generate 12.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tel Aviv 35 vs. Endymed
Performance |
| Timeline |
Tel Aviv and Endymed Volatility Contrast
Predicted Return Density |
| Returns |
Tel Aviv 35
Pair trading matchups for Tel Aviv
Endymed
Pair trading matchups for Endymed
Pair Trading with Tel Aviv and Endymed
The main advantage of trading using opposite Tel Aviv and Endymed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tel Aviv position performs unexpectedly, Endymed 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 Endymed will offset losses from the drop in Endymed's long position.| Tel Aviv vs. One Software Technologies | Tel Aviv vs. Rapac Communication Infrastructure | Tel Aviv vs. Teuza A Fairchild | Tel Aviv vs. Magic Software Enterprises |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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