Correlation Between Kardan Israel and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both Kardan Israel 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 Kardan Israel and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kardan Israel and Alcoa Corp, you can compare the effects of market volatilities on Kardan Israel 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 Kardan Israel with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kardan Israel and Alcoa Corp.
Diversification Opportunities for Kardan Israel and Alcoa Corp
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kardan and Alcoa is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kardan Israel and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Kardan 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 Kardan Israel 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 Kardan Israel i.e., Kardan Israel and Alcoa Corp go up and down completely randomly.
Pair Corralation between Kardan Israel and Alcoa Corp
Assuming the 90 days trading horizon Kardan Israel is expected to generate 0.85 times more return on investment than Alcoa Corp. However, Kardan Israel is 1.18 times less risky than Alcoa Corp. It trades about 0.0 of its potential returns per unit of risk. Alcoa Corp is currently generating about -0.02 per unit of risk. If you would invest 25,562 in Kardan Israel on January 24, 2024 and sell it today you would lose (3,292) from holding Kardan Israel or give up 12.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 78.79% |
| Values | Daily Returns |
Kardan Israel vs. Alcoa Corp
Performance |
| Timeline |
| Kardan Israel |
| Alcoa Corp |
Kardan Israel and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kardan Israel and Alcoa Corp
The main advantage of trading using opposite Kardan Israel and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kardan Israel 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.| Kardan Israel vs. Azrieli Group | Kardan Israel vs. Melisron | Kardan Israel vs. Amot Investments | Kardan Israel vs. Big Shopping Centers |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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