Correlation Between Israel Corp and Brainsway

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

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

Diversification Opportunities for Israel Corp and Brainsway

0.62

Correlation Coefficient

Israel Corp  Brainsway

Poor diversification

The 3 months correlation between Israel and Brainsway is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Israel Corp and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway and Israel Corp 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 Corp are associated (or correlated) with Brainsway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainsway has no effect on the direction of Israel Corp i.e., Israel Corp and Brainsway go up and down completely randomly.

Pair Corralation between Israel Corp and Brainsway

Assuming the 90 days trading horizon Israel Corp is expected to generate 0.97 times more return on investment than Brainsway. However, Israel Corp is 1.03 times less risky than Brainsway. It trades about 0.19 of its potential returns per unit of risk. Brainsway is currently generating about 0.17 per unit of risk. If you would invest  7,727,000  in Israel Corp on September 12, 2024 and sell it today you would earn a total of  2,073,000  from holding Israel Corp or generate 26.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.83%
Values	Daily Returns

Israel Corp  vs.  Brainsway

Israel Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Israel Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Brainsway

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brainsway are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brainsway sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Israel Corp and Brainsway

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

The idea behind Israel Corp and Brainsway 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.