Correlation Between Ituran Location and Service Properties

Can any of the company-specific risk be diversified away by investing in both Ituran Location and Service Properties 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 Service Properties 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 Service Properties Trust, you can compare the effects of market volatilities on Ituran Location and Service Properties 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 Service Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ituran Location and Service Properties.

Diversification Opportunities for Ituran Location and Service Properties

0.41

Correlation Coefficient

Ituran Location  Service Properties

Very weak diversification

The 3 months correlation between Ituran and Service is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ituran Location and and Service Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service Properties Trust 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 Service Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service Properties Trust has no effect on the direction of Ituran Location i.e., Ituran Location and Service Properties go up and down completely randomly.

Pair Corralation between Ituran Location and Service Properties

Given the investment horizon of 90 days Ituran Location and is expected to generate 0.73 times more return on investment than Service Properties. However, Ituran Location and is 1.36 times less risky than Service Properties. It trades about 0.13 of its potential returns per unit of risk. Service Properties Trust is currently generating about 0.07 per unit of risk. If you would invest  2,946  in Ituran Location and on December 28, 2024 and sell it today you would earn a total of  742.00  from holding Ituran Location and or generate 25.19% return on investment over 90 days.

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

Ituran Location and  vs.  Service Properties Trust

Ituran Location

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ituran Location and are ranked lower than 10 (%) 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.

Service Properties Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Service Properties Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Service Properties exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ituran Location and Service Properties

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

The idea behind Ituran Location and and Service Properties Trust 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.