Correlation Between Opal Balance and Itay Financial

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

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

Diversification Opportunities for Opal Balance and Itay Financial

0.84

Correlation Coefficient

Opal Balance  Itay Financial

Very poor diversification

The 3 months correlation between Opal and Itay is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Opal Balance and Itay Financial AA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itay Financial AA and Opal Balance 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 Opal Balance are associated (or correlated) with Itay Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itay Financial AA has no effect on the direction of Opal Balance i.e., Opal Balance and Itay Financial go up and down completely randomly.

Pair Corralation between Opal Balance and Itay Financial

Assuming the 90 days trading horizon Opal Balance is expected to generate 2.59 times less return on investment than Itay Financial. But when comparing it to its historical volatility, Opal Balance is 1.88 times less risky than Itay Financial. It trades about 0.35 of its potential returns per unit of risk. Itay Financial AA is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest  27,000  in Itay Financial AA on September 13, 2024 and sell it today you would earn a total of  11,900  from holding Itay Financial AA or generate 44.07% return on investment over 90 days.

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

Opal Balance  vs.  Itay Financial AA

Opal Balance

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Opal Balance are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Opal Balance sustained solid returns over the last few months and may actually be approaching a breakup point.

Itay Financial AA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Itay Financial AA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Itay Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Opal Balance and Itay Financial

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

The idea behind Opal Balance and Itay Financial AA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.