Correlation Between Gilat Satellite and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both Gilat Satellite and Alcoa Corp 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 Gilat Satellite and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gilat Satellite Networks and Alcoa Corp, you can compare the effects of market volatilities on Gilat Satellite and Alcoa Corp 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 Gilat Satellite with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilat Satellite and Alcoa Corp.
Diversification Opportunities for Gilat Satellite and Alcoa Corp
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gilat and Alcoa is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Gilat Satellite Networks and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Gilat Satellite 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 Gilat Satellite Networks are associated (or correlated) with Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of Gilat Satellite i.e., Gilat Satellite and Alcoa Corp go up and down completely randomly.
Pair Corralation between Gilat Satellite and Alcoa Corp
Assuming the 90 days trading horizon Gilat Satellite Networks is expected to under-perform the Alcoa Corp. In addition to that, Gilat Satellite is 1.23 times more volatile than Alcoa Corp. It trades about -0.05 of its total potential returns per unit of risk. Alcoa Corp is currently generating about 0.26 per unit of volatility. If you would invest 3,135 in Alcoa Corp on January 20, 2024 and sell it today you would earn a total of 412.00 from holding Alcoa Corp or generate 13.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Gilat Satellite Networks vs. Alcoa Corp
Performance |
| Timeline |
| Gilat Satellite Networks |
| Alcoa Corp |
Gilat Satellite and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gilat Satellite and Alcoa Corp
The main advantage of trading using opposite Gilat Satellite and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gilat Satellite position performs unexpectedly, Alcoa Corp 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 Alcoa Corp will offset losses from the drop in Alcoa Corp's long position.| Gilat Satellite vs. Automatic Bank Services | Gilat Satellite vs. EN Shoham Business | Gilat Satellite vs. Rapac Communication Infrastructure | Gilat Satellite vs. Tadiran Hldg |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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