Correlation Between Tel Aviv and RSL Electronics
Can any of the company-specific risk be diversified away by investing in both Tel Aviv and RSL Electronics 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 RSL Electronics 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 RSL Electronics, you can compare the effects of market volatilities on Tel Aviv and RSL Electronics 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 RSL Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tel Aviv and RSL Electronics.
Diversification Opportunities for Tel Aviv and RSL Electronics
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tel and RSL is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Tel Aviv 35 and RSL Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RSL Electronics 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 RSL Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RSL Electronics has no effect on the direction of Tel Aviv i.e., Tel Aviv and RSL Electronics go up and down completely randomly.
Pair Corralation between Tel Aviv and RSL Electronics
Assuming the 90 days trading horizon Tel Aviv is expected to generate 5.71 times less return on investment than RSL Electronics. But when comparing it to its historical volatility, Tel Aviv 35 is 2.98 times less risky than RSL Electronics. It trades about 0.06 of its potential returns per unit of risk. RSL Electronics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 24,264 in RSL Electronics on August 30, 2024 and sell it today you would earn a total of 53,436 from holding RSL Electronics or generate 220.23% 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. RSL Electronics
Performance |
| Timeline |
Tel Aviv and RSL Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Tel Aviv 35
Pair trading matchups for Tel Aviv
RSL Electronics
Pair trading matchups for RSL Electronics
Pair Trading with Tel Aviv and RSL Electronics
The main advantage of trading using opposite Tel Aviv and RSL Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tel Aviv position performs unexpectedly, RSL Electronics 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 RSL Electronics will offset losses from the drop in RSL Electronics' 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 |
| RSL Electronics vs. Ormat Technologies | RSL Electronics vs. Multi Retail Group | RSL Electronics vs. Nova | RSL Electronics vs. B Communications |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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