Correlation Between Danel and Shaniv

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

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

Diversification Opportunities for Danel and Shaniv

0.93

Correlation Coefficient

Danel  Shaniv

Almost no diversification

The 3 months correlation between Danel and Shaniv is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Danel and Shaniv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaniv and Danel 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 Danel are associated (or correlated) with Shaniv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaniv has no effect on the direction of Danel i.e., Danel and Shaniv go up and down completely randomly.

Pair Corralation between Danel and Shaniv

Assuming the 90 days trading horizon Danel is expected to generate 0.96 times more return on investment than Shaniv. However, Danel is 1.05 times less risky than Shaniv. It trades about 0.2 of its potential returns per unit of risk. Shaniv is currently generating about 0.14 per unit of risk. If you would invest  2,929,007  in Danel on September 29, 2024 and sell it today you would earn a total of  1,070,993  from holding Danel or generate 36.57% return on investment over 90 days.

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

Danel  vs.  Shaniv

Danel

Risk-Adjusted Performance

19 of 100

Solid

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

Shaniv

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shaniv are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shaniv sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Danel and Shaniv

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

The idea behind Danel and Shaniv 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.