Correlation Between Senvest Capital and Metro

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

By analyzing existing cross correlation between Senvest Capital and Metro Inc, you can compare the effects of market volatilities on Senvest Capital and Metro 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 Metro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senvest Capital and Metro.

Diversification Opportunities for Senvest Capital and Metro

0.7

Correlation Coefficient

Senvest Capital  Metro

Poor diversification

The 3 months correlation between Senvest and Metro is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Senvest Capital and Metro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Inc 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 Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Inc has no effect on the direction of Senvest Capital i.e., Senvest Capital and Metro go up and down completely randomly.

Pair Corralation between Senvest Capital and Metro

Assuming the 90 days trading horizon Senvest Capital is expected to generate 1.29 times less return on investment than Metro. In addition to that, Senvest Capital is 1.34 times more volatile than Metro Inc. It trades about 0.05 of its total potential returns per unit of risk. Metro Inc is currently generating about 0.09 per unit of volatility. If you would invest  6,903  in Metro Inc on October 4, 2024 and sell it today you would earn a total of  2,114  from holding Metro Inc or generate 30.62% return on investment over 90 days.

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

Senvest Capital  vs.  Metro Inc

Senvest Capital

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Senvest Capital are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Senvest Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Metro Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Metro may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Senvest Capital and Metro

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

The idea behind Senvest Capital and Metro Inc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.