Correlation Between Tower Semiconductor and Global Knafaim
Can any of the company-specific risk be diversified away by investing in both Tower Semiconductor and Global Knafaim 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 Tower Semiconductor and Global Knafaim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tower Semiconductor and Global Knafaim Leasing, you can compare the effects of market volatilities on Tower Semiconductor and Global Knafaim 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 Tower Semiconductor with a short position of Global Knafaim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Semiconductor and Global Knafaim.
Diversification Opportunities for Tower Semiconductor and Global Knafaim
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tower and Global is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tower Semiconductor and Global Knafaim Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Knafaim Leasing and Tower Semiconductor 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 Tower Semiconductor are associated (or correlated) with Global Knafaim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Knafaim Leasing has no effect on the direction of Tower Semiconductor i.e., Tower Semiconductor and Global Knafaim go up and down completely randomly.
Pair Corralation between Tower Semiconductor and Global Knafaim
Assuming the 90 days trading horizon Tower Semiconductor is expected to generate 2.04 times less return on investment than Global Knafaim. In addition to that, Tower Semiconductor is 1.02 times more volatile than Global Knafaim Leasing. It trades about 0.1 of its total potential returns per unit of risk. Global Knafaim Leasing is currently generating about 0.2 per unit of volatility. If you would invest 5,630 in Global Knafaim Leasing on August 29, 2024 and sell it today you would earn a total of 1,370 from holding Global Knafaim Leasing or generate 24.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tower Semiconductor vs. Global Knafaim Leasing
Performance |
| Timeline |
| Tower Semiconductor |
| Global Knafaim Leasing |
Tower Semiconductor and Global Knafaim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tower Semiconductor and Global Knafaim
The main advantage of trading using opposite Tower Semiconductor and Global Knafaim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Semiconductor position performs unexpectedly, Global Knafaim 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 Global Knafaim will offset losses from the drop in Global Knafaim's long position.| Tower Semiconductor vs. Teva Pharmaceutical Industries | Tower Semiconductor vs. Elbit Systems | Tower Semiconductor vs. Bezeq Israeli Telecommunication | Tower Semiconductor vs. ICL Israel Chemicals |
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 Stocks Directory module to find actively traded stocks across global markets.
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