Correlation Between Tel Aviv and Nextgen
Can any of the company-specific risk be diversified away by investing in both Tel Aviv and Nextgen 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 Nextgen 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 Nextgen, you can compare the effects of market volatilities on Tel Aviv and Nextgen 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 Nextgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tel Aviv and Nextgen.
Diversification Opportunities for Tel Aviv and Nextgen
Good diversification
The 3 months correlation between Tel and Nextgen is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Tel Aviv 35 and Nextgen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextgen 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 Nextgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextgen has no effect on the direction of Tel Aviv i.e., Tel Aviv and Nextgen go up and down completely randomly.
Pair Corralation between Tel Aviv and Nextgen
Assuming the 90 days trading horizon Tel Aviv 35 is expected to generate 0.14 times more return on investment than Nextgen. However, Tel Aviv 35 is 6.98 times less risky than Nextgen. It trades about 0.17 of its potential returns per unit of risk. Nextgen is currently generating about -0.03 per unit of risk. If you would invest 197,228 in Tel Aviv 35 on November 28, 2024 and sell it today you would earn a total of 48,863 from holding Tel Aviv 35 or generate 24.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tel Aviv 35 vs. Nextgen
Performance |
| Timeline |
Tel Aviv and Nextgen Volatility Contrast
Predicted Return Density |
| Returns |
Tel Aviv 35
Pair trading matchups for Tel Aviv
Nextgen
Pair trading matchups for Nextgen
Pair Trading with Tel Aviv and Nextgen
The main advantage of trading using opposite Tel Aviv and Nextgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tel Aviv position performs unexpectedly, Nextgen 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 Nextgen will offset losses from the drop in Nextgen's long position.| Tel Aviv vs. Menif Financial Services | Tel Aviv vs. WhiteSmoke Software | Tel Aviv vs. Harel Insurance Investments | Tel Aviv vs. First International Bank |
| Nextgen vs. Clal Biotechnology Industries | Nextgen vs. Spuntech | Nextgen vs. Orbit Technologies | Nextgen vs. Rimon Consulting Management |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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