Correlation Between Bezeq Israeli and Aerodrome
Can any of the company-specific risk be diversified away by investing in both Bezeq Israeli and Aerodrome 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 Bezeq Israeli and Aerodrome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bezeq Israeli Telecommunication and Aerodrome Group, you can compare the effects of market volatilities on Bezeq Israeli and Aerodrome 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 Bezeq Israeli with a short position of Aerodrome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bezeq Israeli and Aerodrome.
Diversification Opportunities for Bezeq Israeli and Aerodrome
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bezeq and Aerodrome is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Aerodrome Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerodrome Group and Bezeq Israeli 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 Bezeq Israeli Telecommunication are associated (or correlated) with Aerodrome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerodrome Group has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Aerodrome go up and down completely randomly.
Pair Corralation between Bezeq Israeli and Aerodrome
Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to generate 0.22 times more return on investment than Aerodrome. However, Bezeq Israeli Telecommunication is 4.45 times less risky than Aerodrome. It trades about 0.5 of its potential returns per unit of risk. Aerodrome Group is currently generating about -0.07 per unit of risk. If you would invest 45,900 in Bezeq Israeli Telecommunication on August 29, 2024 and sell it today you would earn a total of 6,850 from holding Bezeq Israeli Telecommunication or generate 14.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bezeq Israeli Telecommunicatio vs. Aerodrome Group
Performance |
| Timeline |
| Bezeq Israeli Teleco |
| Aerodrome Group |
Bezeq Israeli and Aerodrome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bezeq Israeli and Aerodrome
The main advantage of trading using opposite Bezeq Israeli and Aerodrome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bezeq Israeli position performs unexpectedly, Aerodrome 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 Aerodrome will offset losses from the drop in Aerodrome's long position.| Bezeq Israeli vs. Tower Semiconductor | Bezeq Israeli vs. Israel Discount Bank | Bezeq Israeli vs. Holmes Place International | Bezeq Israeli vs. Nova |
| Aerodrome vs. Tower Semiconductor | Aerodrome vs. Israel Discount Bank | Aerodrome vs. Holmes Place International | Aerodrome vs. Nova |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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