Correlation Between Brand and Poalim Ibi

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

By analyzing existing cross correlation between Brand Group and Poalim Ibi, you can compare the effects of market volatilities on Brand and Poalim Ibi 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 Poalim Ibi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brand and Poalim Ibi.

Diversification Opportunities for Brand and Poalim Ibi

0.83

Correlation Coefficient

Brand  Poalim Ibi

Very poor diversification

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

Pair Corralation between Brand and Poalim Ibi

Assuming the 90 days trading horizon Brand is expected to generate 1.02 times less return on investment than Poalim Ibi. In addition to that, Brand is 1.02 times more volatile than Poalim Ibi. It trades about 0.25 of its total potential returns per unit of risk. Poalim Ibi is currently generating about 0.26 per unit of volatility. If you would invest  64,000  in Poalim Ibi on September 29, 2024 and sell it today you would earn a total of  16,800  from holding Poalim Ibi or generate 26.25% 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.  Poalim Ibi

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.

Poalim Ibi

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Poalim Ibi are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Poalim Ibi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brand and Poalim Ibi

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

The idea behind Brand Group and Poalim Ibi 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.