Correlation Between Senvest Capital and Diamond Estates

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

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

Diversification Opportunities for Senvest Capital and Diamond Estates

-0.25

Correlation Coefficient

Senvest Capital  Diamond Estates

Very good diversification

The 3 months correlation between Senvest and Diamond is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Senvest Capital and Diamond Estates Wines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Estates Wines and Senvest Capital 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 Senvest Capital are associated (or correlated) with Diamond Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Estates Wines has no effect on the direction of Senvest Capital i.e., Senvest Capital and Diamond Estates go up and down completely randomly.

Pair Corralation between Senvest Capital and Diamond Estates

Assuming the 90 days trading horizon Senvest Capital is expected to generate 0.27 times more return on investment than Diamond Estates. However, Senvest Capital is 3.73 times less risky than Diamond Estates. It trades about 0.04 of its potential returns per unit of risk. Diamond Estates Wines is currently generating about -0.03 per unit of risk. If you would invest  38,000  in Senvest Capital on December 30, 2024 and sell it today you would earn a total of  819.00  from holding Senvest Capital or generate 2.16% return on investment over 90 days.

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

Senvest Capital  vs.  Diamond Estates Wines

Senvest Capital

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Senvest Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Senvest Capital is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Diamond Estates Wines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamond Estates Wines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Diamond Estates is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Senvest Capital and Diamond Estates

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

The idea behind Senvest Capital and Diamond Estates Wines 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.