Correlation Between Gazit Globe and Aura Investments
Can any of the company-specific risk be diversified away by investing in both Gazit Globe and Aura Investments 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 Gazit Globe and Aura Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gazit Globe and Aura Investments, you can compare the effects of market volatilities on Gazit Globe and Aura Investments 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 Gazit Globe with a short position of Aura Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gazit Globe and Aura Investments.
Diversification Opportunities for Gazit Globe and Aura Investments
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gazit and Aura is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Gazit Globe and Aura Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Investments and Gazit Globe 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 Gazit Globe are associated (or correlated) with Aura Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Investments has no effect on the direction of Gazit Globe i.e., Gazit Globe and Aura Investments go up and down completely randomly.
Pair Corralation between Gazit Globe and Aura Investments
Assuming the 90 days trading horizon Gazit Globe is expected to generate 3.5 times less return on investment than Aura Investments. In addition to that, Gazit Globe is 1.11 times more volatile than Aura Investments. It trades about 0.06 of its total potential returns per unit of risk. Aura Investments is currently generating about 0.23 per unit of volatility. If you would invest 83,086 in Aura Investments on January 25, 2024 and sell it today you would earn a total of 61,114 from holding Aura Investments or generate 73.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gazit Globe vs. Aura Investments
Performance |
| Timeline |
| Gazit Globe |
| Aura Investments |
Gazit Globe and Aura Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gazit Globe and Aura Investments
The main advantage of trading using opposite Gazit Globe and Aura Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gazit Globe position performs unexpectedly, Aura Investments 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 Aura Investments will offset losses from the drop in Aura Investments' long position.The idea behind Gazit Globe and Aura Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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