Correlation Between Israel Corp and Schnapp

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

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

Diversification Opportunities for Israel Corp and Schnapp

0.84

Correlation Coefficient

Israel Corp  Schnapp

Very poor diversification

The 3 months correlation between Israel and Schnapp is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Israel Corp and Schnapp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schnapp 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 Schnapp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schnapp has no effect on the direction of Israel Corp i.e., Israel Corp and Schnapp go up and down completely randomly.

Pair Corralation between Israel Corp and Schnapp

Assuming the 90 days trading horizon Israel Corp is expected to generate 1.38 times less return on investment than Schnapp. But when comparing it to its historical volatility, Israel Corp is 1.03 times less risky than Schnapp. It trades about 0.12 of its potential returns per unit of risk. Schnapp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  127,994  in Schnapp on September 28, 2024 and sell it today you would earn a total of  27,006  from holding Schnapp or generate 21.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.87%
Values	Daily Returns

Israel Corp  vs.  Schnapp

Israel Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Corp are ranked lower than 9 (%) 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.

Schnapp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Schnapp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Schnapp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Israel Corp and Schnapp

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

The idea behind Israel Corp and Schnapp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.