Correlation Between Nice and Azrieli

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

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

Diversification Opportunities for Nice and Azrieli

0.9

Correlation Coefficient

Nice  Azrieli

Almost no diversification

The 5 months correlation between Nice and Azrieli is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Nice and Azrieli Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azrieli Group and Nice 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 Nice are associated (or correlated) with Azrieli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azrieli Group has no effect on the direction of Nice i.e., Nice and Azrieli go up and down completely randomly.

Pair Corralation between Nice and Azrieli

Assuming the 90 days trading horizon Nice is expected to under-perform the Azrieli. But the stock apears to be less risky and, when comparing its historical volatility, Nice is 1.32 times less risky than Azrieli. The stock trades about -0.42 of its potential returns per unit of risk. The Azrieli Group is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  2,573,097  in Azrieli Group on January 28, 2024 and sell it today you would lose (148,097) from holding Azrieli Group or give up 5.76% of portfolio value over 90 days.

Time Period	5 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Nice  vs.  Azrieli Group

Nice

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nice are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nice sustained solid returns over the last few months and may actually be approaching a breakup point.

Azrieli Group

Risk-Adjusted Performance

6 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Azrieli Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Azrieli may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Nice and Azrieli

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

The idea behind Nice and Azrieli Group 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.