Correlation Between B Communications and Itay Financial
Can any of the company-specific risk be diversified away by investing in both B Communications 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 B Communications and Itay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Itay Financial AA, you can compare the effects of market volatilities on B Communications 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 B Communications with a short position of Itay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Itay Financial.
Diversification Opportunities for B Communications and Itay Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BCOM and Itay is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding B Communications 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 B Communications 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 B Communications 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 B Communications i.e., B Communications and Itay Financial go up and down completely randomly.
Pair Corralation between B Communications and Itay Financial
Assuming the 90 days trading horizon B Communications is expected to generate 0.74 times more return on investment than Itay Financial. However, B Communications is 1.35 times less risky than Itay Financial. It trades about 0.39 of its potential returns per unit of risk. Itay Financial AA is currently generating about 0.2 per unit of risk. If you would invest 130,000 in B Communications on August 29, 2024 and sell it today you would earn a total of 38,100 from holding B Communications or generate 29.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
B Communications vs. Itay Financial AA
Performance |
| Timeline |
| B Communications |
| Itay Financial AA |
B Communications and Itay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Itay Financial
The main advantage of trading using opposite B Communications and Itay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications 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.| B Communications vs. Bezeq Israeli Telecommunication | B Communications vs. Tower Semiconductor | B Communications vs. Israel Discount Bank | B Communications vs. Holmes Place International |
| Itay Financial vs. Direct Capital Investments | Itay Financial vs. Netz Hotels | Itay Financial vs. B Communications | Itay Financial vs. Holmes Place International |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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