Correlation Between Israel Opportunity and Evogene

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

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

Diversification Opportunities for Israel Opportunity and Evogene

-0.82

Correlation Coefficient

Israel Opportunity  Evogene

Pay attention - limited upside

The 3 months correlation between Israel and Evogene is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Israel Opportunity and Evogene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evogene and Israel Opportunity 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 Opportunity are associated (or correlated) with Evogene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evogene has no effect on the direction of Israel Opportunity i.e., Israel Opportunity and Evogene go up and down completely randomly.

Pair Corralation between Israel Opportunity and Evogene

Assuming the 90 days trading horizon Israel Opportunity is expected to generate 0.56 times more return on investment than Evogene. However, Israel Opportunity is 1.8 times less risky than Evogene. It trades about -0.04 of its potential returns per unit of risk. Evogene is currently generating about -0.3 per unit of risk. If you would invest  7,850  in Israel Opportunity on August 30, 2024 and sell it today you would lose (520.00) from holding Israel Opportunity or give up 6.62% of portfolio value over 90 days.

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

Israel Opportunity   vs.  Evogene

Israel Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Israel Opportunity 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.

Evogene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evogene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Israel Opportunity and Evogene

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

The idea behind Israel Opportunity and Evogene 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.