Correlation Between Victory Supermarket and Arad Investment
Can any of the company-specific risk be diversified away by investing in both Victory Supermarket and Arad Investment 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 Victory Supermarket and Arad Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victory Supermarket Chain and Arad Investment Industrial, you can compare the effects of market volatilities on Victory Supermarket and Arad Investment 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 Victory Supermarket with a short position of Arad Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Supermarket and Arad Investment.
Diversification Opportunities for Victory Supermarket and Arad Investment
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Victory and Arad is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Victory Supermarket Chain and Arad Investment Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arad Investment Indu and Victory Supermarket 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 Victory Supermarket Chain are associated (or correlated) with Arad Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arad Investment Indu has no effect on the direction of Victory Supermarket i.e., Victory Supermarket and Arad Investment go up and down completely randomly.
Pair Corralation between Victory Supermarket and Arad Investment
Assuming the 90 days trading horizon Victory Supermarket Chain is expected to under-perform the Arad Investment. But the stock apears to be less risky and, when comparing its historical volatility, Victory Supermarket Chain is 1.56 times less risky than Arad Investment. The stock trades about 0.0 of its potential returns per unit of risk. The Arad Investment Industrial is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,570,000 in Arad Investment Industrial on November 3, 2024 and sell it today you would earn a total of 170,000 from holding Arad Investment Industrial or generate 10.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Victory Supermarket Chain vs. Arad Investment Industrial
Performance |
| Timeline |
| Victory Supermarket Chain |
| Arad Investment Indu |
Victory Supermarket and Arad Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victory Supermarket and Arad Investment
The main advantage of trading using opposite Victory Supermarket and Arad Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Supermarket position performs unexpectedly, Arad Investment 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 Arad Investment will offset losses from the drop in Arad Investment's long position.| Victory Supermarket vs. Shufersal | Victory Supermarket vs. Rami Levi | Victory Supermarket vs. Tiv Taam | Victory Supermarket vs. M Yochananof and |
| Arad Investment vs. Arad | Arad Investment vs. Alony Hetz Properties | Arad Investment vs. Danel | Arad Investment vs. Airport City |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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