Correlation Between Rotshtein and Isras Investment

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

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

Diversification Opportunities for Rotshtein and Isras Investment

-0.49

Correlation Coefficient

Rotshtein  Isras Investment

Very good diversification

The 3 months correlation between Rotshtein and Isras is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Rotshtein and Isras Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isras Investment and Rotshtein 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 Rotshtein are associated (or correlated) with Isras Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isras Investment has no effect on the direction of Rotshtein i.e., Rotshtein and Isras Investment go up and down completely randomly.

Pair Corralation between Rotshtein and Isras Investment

Assuming the 90 days trading horizon Rotshtein is expected to generate 2.4 times more return on investment than Isras Investment. However, Rotshtein is 2.4 times more volatile than Isras Investment. It trades about 0.13 of its potential returns per unit of risk. Isras Investment is currently generating about -0.22 per unit of risk. If you would invest  371,900  in Rotshtein on February 1, 2024 and sell it today you would earn a total of  22,300  from holding Rotshtein or generate 6.0% return on investment over 90 days.

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

Rotshtein  vs.  Isras Investment

Rotshtein

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Rotshtein has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Rotshtein sustained solid returns over the last few months and may actually be approaching a breakup point.

Isras Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Isras Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Isras Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rotshtein and Isras Investment

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

The idea behind Rotshtein and Isras Investment 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.