Correlation Between Tower Semiconductor and Lesico
Can any of the company-specific risk be diversified away by investing in both Tower Semiconductor and Lesico 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 Lesico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tower Semiconductor and Lesico, you can compare the effects of market volatilities on Tower Semiconductor and Lesico 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 Lesico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Semiconductor and Lesico.
Diversification Opportunities for Tower Semiconductor and Lesico
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tower and Lesico is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tower Semiconductor and Lesico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesico 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 Lesico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lesico has no effect on the direction of Tower Semiconductor i.e., Tower Semiconductor and Lesico go up and down completely randomly.
Pair Corralation between Tower Semiconductor and Lesico
Assuming the 90 days trading horizon Tower Semiconductor is expected to generate 4.0 times less return on investment than Lesico. But when comparing it to its historical volatility, Tower Semiconductor is 1.1 times less risky than Lesico. It trades about 0.13 of its potential returns per unit of risk. Lesico is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 29,860 in Lesico on September 1, 2024 and sell it today you would earn a total of 10,730 from holding Lesico or generate 35.93% 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. Lesico
Performance |
| Timeline |
| Tower Semiconductor |
| Lesico |
Tower Semiconductor and Lesico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tower Semiconductor and Lesico
The main advantage of trading using opposite Tower Semiconductor and Lesico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Semiconductor position performs unexpectedly, Lesico 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 Lesico will offset losses from the drop in Lesico's long position.| Tower Semiconductor vs. Palram | Tower Semiconductor vs. Shagrir Group Vehicle | Tower Semiconductor vs. EN Shoham Business | Tower Semiconductor vs. Shufersal |
| Lesico vs. Arad | Lesico vs. Alony Hetz Properties | Lesico vs. Airport City | Lesico vs. Harel Insurance Investments |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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