Correlation Between Israel Canada and Aura Investments
Can any of the company-specific risk be diversified away by investing in both Israel Canada 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 Israel Canada and Aura Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Canada and Aura Investments, you can compare the effects of market volatilities on Israel Canada 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 Israel Canada with a short position of Aura Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Canada and Aura Investments.
Diversification Opportunities for Israel Canada and Aura Investments
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Israel and Aura is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Israel Canada and Aura Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Investments and Israel Canada 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 Israel Canada 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 Israel Canada i.e., Israel Canada and Aura Investments go up and down completely randomly.
Pair Corralation between Israel Canada and Aura Investments
Assuming the 90 days trading horizon Israel Canada is expected to generate 3.27 times less return on investment than Aura Investments. In addition to that, Israel Canada is 1.06 times more volatile than Aura Investments. It trades about 0.04 of its total potential returns per unit of risk. Aura Investments is currently generating about 0.16 per unit of volatility. If you would invest 116,619 in Aura Investments on February 19, 2024 and sell it today you would earn a total of 22,281 from holding Aura Investments or generate 19.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Israel Canada vs. Aura Investments
Performance |
Timeline |
Israel Canada |
Aura Investments |
Israel Canada and Aura Investments Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Israel Canada and Aura Investments
The main advantage of trading using opposite Israel Canada and Aura Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Canada 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.Israel Canada vs. Amot Investments | Israel Canada vs. Azrieli Group | Israel Canada vs. Melisron | Israel Canada vs. Israel Discount Bank |
Aura Investments vs. Amot Investments | Aura Investments vs. Azrieli Group | Aura Investments vs. Melisron | Aura Investments vs. Israel Discount Bank |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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