Correlation Between Isras Investment and Gold Bond

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

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

Diversification Opportunities for Isras Investment and Gold Bond

-0.36

Correlation Coefficient

Isras Investment  Gold Bond

Very good diversification

The 3 months correlation between Isras and Gold is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Isras Investment and The Gold Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bond and Isras Investment 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 Isras Investment are associated (or correlated) with Gold Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bond has no effect on the direction of Isras Investment i.e., Isras Investment and Gold Bond go up and down completely randomly.

Pair Corralation between Isras Investment and Gold Bond

Assuming the 90 days trading horizon Isras Investment is expected to under-perform the Gold Bond. But the stock apears to be less risky and, when comparing its historical volatility, Isras Investment is 1.27 times less risky than Gold Bond. The stock trades about -0.07 of its potential returns per unit of risk. The The Gold Bond is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,680,608  in The Gold Bond on December 30, 2024 and sell it today you would earn a total of  88,392  from holding The Gold Bond or generate 5.26% return on investment over 90 days.

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

Isras Investment  vs.  The Gold Bond

Isras Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Isras Investment 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.

Gold Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Gold Bond are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gold Bond may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Isras Investment and Gold Bond

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

The idea behind Isras Investment and The Gold Bond 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.