Correlation Between Israel Land and Willy Food

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

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

Diversification Opportunities for Israel Land and Willy Food

-0.34

Correlation Coefficient

Israel Land  Willy Food

Very good diversification

The 3 months correlation between Israel and Willy is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Israel Land Development and Willy Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willy Food and Israel Land 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 Land Development are associated (or correlated) with Willy Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willy Food has no effect on the direction of Israel Land i.e., Israel Land and Willy Food go up and down completely randomly.

Pair Corralation between Israel Land and Willy Food

Assuming the 90 days trading horizon Israel Land Development is expected to under-perform the Willy Food. In addition to that, Israel Land is 1.05 times more volatile than Willy Food. It trades about -0.09 of its total potential returns per unit of risk. Willy Food is currently generating about 0.0 per unit of volatility. If you would invest  284,400  in Willy Food on December 30, 2024 and sell it today you would lose (2,700) from holding Willy Food or give up 0.95% of portfolio value over 90 days.

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

Israel Land Development  vs.  Willy Food

Israel Land Development

Risk-Adjusted Performance

Very Weak

Over the last 90 days Israel Land Development 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.

Willy Food

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Israel Land and Willy Food

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

The idea behind Israel Land Development and Willy Food 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.