Correlation Between Brand and Mivne Real

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

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

Diversification Opportunities for Brand and Mivne Real

0.83

Correlation Coefficient

Brand  Mivne Real

Very poor diversification

The 3 months correlation between Brand and Mivne is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Brand Group and Mivne Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mivne Real Estate and Brand 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 Brand Group are associated (or correlated) with Mivne Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mivne Real Estate has no effect on the direction of Brand i.e., Brand and Mivne Real go up and down completely randomly.

Pair Corralation between Brand and Mivne Real

Assuming the 90 days trading horizon Brand Group is expected to generate 1.26 times more return on investment than Mivne Real. However, Brand is 1.26 times more volatile than Mivne Real Estate. It trades about 0.25 of its potential returns per unit of risk. Mivne Real Estate is currently generating about 0.2 per unit of risk. If you would invest  22,920  in Brand Group on September 29, 2024 and sell it today you would earn a total of  5,880  from holding Brand Group or generate 25.65% return on investment over 90 days.

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

Brand Group  vs.  Mivne Real Estate

Brand Group

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brand Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brand sustained solid returns over the last few months and may actually be approaching a breakup point.

Mivne Real Estate

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mivne Real Estate are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mivne Real sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brand and Mivne Real

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

The idea behind Brand Group and Mivne Real Estate 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..