Correlation Between Tel Aviv and Nissan
Can any of the company-specific risk be diversified away by investing in both Tel Aviv and Nissan 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 Nissan 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 Nissan, you can compare the effects of market volatilities on Tel Aviv and Nissan 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 Nissan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tel Aviv and Nissan.
Diversification Opportunities for Tel Aviv and Nissan
Very weak diversification
The 3 months correlation between Tel and Nissan is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Tel Aviv 35 and Nissan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nissan 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 Nissan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nissan has no effect on the direction of Tel Aviv i.e., Tel Aviv and Nissan go up and down completely randomly.
Pair Corralation between Tel Aviv and Nissan
Assuming the 90 days trading horizon Tel Aviv 35 is expected to generate 0.22 times more return on investment than Nissan. However, Tel Aviv 35 is 4.65 times less risky than Nissan. It trades about 0.17 of its potential returns per unit of risk. Nissan is currently generating about -0.09 per unit of risk. If you would invest 220,397 in Tel Aviv 35 on September 1, 2024 and sell it today you would earn a total of 5,652 from holding Tel Aviv 35 or generate 2.56% 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. Nissan
Performance |
| Timeline |
Tel Aviv and Nissan Volatility Contrast
Predicted Return Density |
| Returns |
Tel Aviv 35
Pair trading matchups for Tel Aviv
Nissan
Pair trading matchups for Nissan
Pair Trading with Tel Aviv and Nissan
The main advantage of trading using opposite Tel Aviv and Nissan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tel Aviv position performs unexpectedly, Nissan 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 Nissan will offset losses from the drop in Nissan'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 |
| Nissan vs. Bezeq Israeli Telecommunication | Nissan vs. Brainsway | Nissan vs. Mivne Real Estate | Nissan vs. Photomyne |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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