Correlation Between Gazit Globe and Norstar
Can any of the company-specific risk be diversified away by investing in both Gazit Globe and Norstar 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 Norstar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gazit Globe and Norstar, you can compare the effects of market volatilities on Gazit Globe and Norstar 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 Norstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gazit Globe and Norstar.
Diversification Opportunities for Gazit Globe and Norstar
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gazit and Norstar is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Gazit Globe and Norstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norstar 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 Norstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norstar has no effect on the direction of Gazit Globe i.e., Gazit Globe and Norstar go up and down completely randomly.
Pair Corralation between Gazit Globe and Norstar
Assuming the 90 days trading horizon Gazit Globe is expected to generate 0.9 times more return on investment than Norstar. However, Gazit Globe is 1.11 times less risky than Norstar. It trades about -0.02 of its potential returns per unit of risk. Norstar is currently generating about -0.05 per unit of risk. If you would invest 207,300 in Gazit Globe on January 25, 2024 and sell it today you would lose (96,300) from holding Gazit Globe or give up 46.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gazit Globe vs. Norstar
Performance |
| Timeline |
| Gazit Globe |
| Norstar |
Gazit Globe and Norstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gazit Globe and Norstar
The main advantage of trading using opposite Gazit Globe and Norstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gazit Globe position performs unexpectedly, Norstar 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 Norstar will offset losses from the drop in Norstar's long position.The idea behind Gazit Globe and Norstar 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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