Correlation Between Cellcom Israel and Partner
Can any of the company-specific risk be diversified away by investing in both Cellcom Israel and Partner 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 Cellcom Israel and Partner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cellcom Israel and Partner, you can compare the effects of market volatilities on Cellcom Israel and Partner 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 Cellcom Israel with a short position of Partner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cellcom Israel and Partner.
Diversification Opportunities for Cellcom Israel and Partner
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cellcom and Partner is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cellcom Israel and Partner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partner and Cellcom Israel 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 Cellcom Israel are associated (or correlated) with Partner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partner has no effect on the direction of Cellcom Israel i.e., Cellcom Israel and Partner go up and down completely randomly.
Pair Corralation between Cellcom Israel and Partner
Assuming the 90 days trading horizon Cellcom Israel is expected to under-perform the Partner. In addition to that, Cellcom Israel is 1.04 times more volatile than Partner. It trades about -0.04 of its total potential returns per unit of risk. Partner is currently generating about 0.31 per unit of volatility. If you would invest 157,200 in Partner on January 26, 2024 and sell it today you would earn a total of 15,800 from holding Partner or generate 10.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Cellcom Israel vs. Partner
Performance |
Timeline |
Cellcom Israel |
Partner |
Cellcom Israel and Partner Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cellcom Israel and Partner
The main advantage of trading using opposite Cellcom Israel and Partner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cellcom Israel position performs unexpectedly, Partner 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 Partner will offset losses from the drop in Partner's long position.Cellcom Israel vs. Partner | Cellcom Israel vs. Tower Semiconductor | Cellcom Israel vs. Israel Discount Bank |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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