Correlation Between Aerodrome and MEITAV INVESTMENTS

Can any of the company-specific risk be diversified away by investing in both Aerodrome and MEITAV 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 Aerodrome and MEITAV INVESTMENTS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aerodrome Group and MEITAV INVESTMENTS HOUSE, you can compare the effects of market volatilities on Aerodrome and MEITAV 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 Aerodrome with a short position of MEITAV INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerodrome and MEITAV INVESTMENTS.

Diversification Opportunities for Aerodrome and MEITAV INVESTMENTS

0.38

Correlation Coefficient

Aerodrome  MEITAV INVESTMENTS

Weak diversification

The 3 months correlation between Aerodrome and MEITAV is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Aerodrome Group and MEITAV INVESTMENTS HOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEITAV INVESTMENTS HOUSE and Aerodrome 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 Aerodrome Group are associated (or correlated) with MEITAV INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEITAV INVESTMENTS HOUSE has no effect on the direction of Aerodrome i.e., Aerodrome and MEITAV INVESTMENTS go up and down completely randomly.

Pair Corralation between Aerodrome and MEITAV INVESTMENTS

Assuming the 90 days trading horizon Aerodrome Group is expected to generate 2.78 times more return on investment than MEITAV INVESTMENTS. However, Aerodrome is 2.78 times more volatile than MEITAV INVESTMENTS HOUSE. It trades about 0.13 of its potential returns per unit of risk. MEITAV INVESTMENTS HOUSE is currently generating about 0.2 per unit of risk. If you would invest  6,500  in Aerodrome Group on February 20, 2024 and sell it today you would earn a total of  4,500  from holding Aerodrome Group or generate 69.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aerodrome Group  vs.  MEITAV INVESTMENTS HOUSE

Aerodrome Group

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aerodrome Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aerodrome sustained solid returns over the last few months and may actually be approaching a breakup point.

MEITAV INVESTMENTS HOUSE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MEITAV INVESTMENTS HOUSE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MEITAV INVESTMENTS may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Aerodrome and MEITAV INVESTMENTS

The main advantage of trading using opposite Aerodrome and MEITAV INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerodrome position performs unexpectedly, MEITAV 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 MEITAV INVESTMENTS will offset losses from the drop in MEITAV INVESTMENTS's long position.

The idea behind Aerodrome Group and MEITAV INVESTMENTS HOUSE 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.