Correlation Between Ituran Location and Sobr Safe

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

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

Diversification Opportunities for Ituran Location and Sobr Safe

-0.61

Correlation Coefficient

Ituran Location  Sobr Safe

Excellent diversification

The 3 months correlation between Ituran and Sobr is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ituran Location and and Sobr Safe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sobr Safe and Ituran Location 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 Ituran Location and are associated (or correlated) with Sobr Safe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sobr Safe has no effect on the direction of Ituran Location i.e., Ituran Location and Sobr Safe go up and down completely randomly.

Pair Corralation between Ituran Location and Sobr Safe

Given the investment horizon of 90 days Ituran Location and is expected to generate 0.13 times more return on investment than Sobr Safe. However, Ituran Location and is 7.74 times less risky than Sobr Safe. It trades about 0.06 of its potential returns per unit of risk. Sobr Safe is currently generating about -0.02 per unit of risk. If you would invest  2,101  in Ituran Location and on October 8, 2024 and sell it today you would earn a total of  1,172  from holding Ituran Location and or generate 55.78% return on investment over 90 days.

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

Ituran Location and  vs.  Sobr Safe

Ituran Location

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ituran Location and are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Ituran Location displayed solid returns over the last few months and may actually be approaching a breakup point.

Sobr Safe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sobr Safe has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ituran Location and Sobr Safe

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

The idea behind Ituran Location and and Sobr Safe 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.