Correlation Between Amot Investments and Reit 1

Can any of the company-specific risk be diversified away by investing in both Amot Investments and Reit 1 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 Amot Investments and Reit 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amot Investments and Reit 1, you can compare the effects of market volatilities on Amot Investments and Reit 1 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 Amot Investments with a short position of Reit 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amot Investments and Reit 1.

Diversification Opportunities for Amot Investments and Reit 1

0.78

Correlation Coefficient

Amot Investments  Reit 1

Poor diversification

The 3 months correlation between Amot and Reit is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Amot Investments and Reit 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reit 1 and Amot Investments 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 Amot Investments are associated (or correlated) with Reit 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reit 1 has no effect on the direction of Amot Investments i.e., Amot Investments and Reit 1 go up and down completely randomly.

Pair Corralation between Amot Investments and Reit 1

Assuming the 90 days trading horizon Amot Investments is expected to under-perform the Reit 1. But the stock apears to be less risky and, when comparing its historical volatility, Amot Investments is 1.14 times less risky than Reit 1. The stock trades about -0.12 of its potential returns per unit of risk. The Reit 1 is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  188,600  in Reit 1 on December 29, 2024 and sell it today you would lose (11,100) from holding Reit 1 or give up 5.89% of portfolio value over 90 days.

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

Amot Investments  vs.  Reit 1

Amot Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amot Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Reit 1

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reit 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Amot Investments and Reit 1

The main advantage of trading using opposite Amot Investments and Reit 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amot Investments position performs unexpectedly, Reit 1 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 Reit 1 will offset losses from the drop in Reit 1's long position.

The idea behind Amot Investments and Reit 1 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.