Correlation Between Gazit Globe and Lahav LR

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

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

Diversification Opportunities for Gazit Globe and Lahav LR

0.61

Correlation Coefficient

Gazit Globe  Lahav LR

Poor diversification

The 3 months correlation between Gazit and Lahav is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gazit Globe and Lahav LR Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lahav LR Real and Gazit Globe 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 Gazit Globe are associated (or correlated) with Lahav LR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lahav LR Real has no effect on the direction of Gazit Globe i.e., Gazit Globe and Lahav LR go up and down completely randomly.

Pair Corralation between Gazit Globe and Lahav LR

Assuming the 90 days trading horizon Gazit Globe is expected to under-perform the Lahav LR. In addition to that, Gazit Globe is 1.6 times more volatile than Lahav LR Real. It trades about -0.28 of its total potential returns per unit of risk. Lahav LR Real is currently generating about 0.34 per unit of volatility. If you would invest  45,780  in Lahav LR Real on September 28, 2024 and sell it today you would earn a total of  4,410  from holding Lahav LR Real or generate 9.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Gazit Globe  vs.  Lahav LR Real

Gazit Globe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gazit Globe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Gazit Globe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lahav LR Real

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Lahav LR Real are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Lahav LR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gazit Globe and Lahav LR

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

The idea behind Gazit Globe and Lahav LR Real 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.