Correlation Between Isramco Negev and Nice

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

By analyzing existing cross correlation between Isramco Negev 2 and Nice, you can compare the effects of market volatilities on Isramco Negev and Nice 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 Isramco Negev with a short position of Nice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Isramco Negev and Nice.

Diversification Opportunities for Isramco Negev and Nice

0.52

Correlation Coefficient

Isramco Negev  Nice

Very weak diversification

The 3 months correlation between Isramco and Nice is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Isramco Negev 2 and Nice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice and Isramco Negev 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 Isramco Negev 2 are associated (or correlated) with Nice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice has no effect on the direction of Isramco Negev i.e., Isramco Negev and Nice go up and down completely randomly.

Pair Corralation between Isramco Negev and Nice

Assuming the 90 days trading horizon Isramco Negev 2 is expected to generate 0.73 times more return on investment than Nice. However, Isramco Negev 2 is 1.38 times less risky than Nice. It trades about -0.03 of its potential returns per unit of risk. Nice is currently generating about -0.1 per unit of risk. If you would invest  19,118  in Isramco Negev 2 on September 27, 2024 and sell it today you would lose (188.00) from holding Isramco Negev 2 or give up 0.98% of portfolio value over 90 days.

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

Isramco Negev 2  vs.  Nice

Isramco Negev 2

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Isramco Negev 2 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Isramco Negev sustained solid returns over the last few months and may actually be approaching a breakup point.

Nice

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Isramco Negev and Nice

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

The idea behind Isramco Negev 2 and Nice 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.