Correlation Between Bezeq Israeli and IDI Insurance
Can any of the company-specific risk be diversified away by investing in both Bezeq Israeli and IDI Insurance 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 IDI Insurance 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 IDI Insurance, you can compare the effects of market volatilities on Bezeq Israeli and IDI Insurance 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 IDI Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bezeq Israeli and IDI Insurance.
Diversification Opportunities for Bezeq Israeli and IDI Insurance
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bezeq and IDI is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and IDI Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDI Insurance 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 IDI Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDI Insurance has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and IDI Insurance go up and down completely randomly.
Pair Corralation between Bezeq Israeli and IDI Insurance
Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to generate 0.89 times more return on investment than IDI Insurance. However, Bezeq Israeli Telecommunication is 1.13 times less risky than IDI Insurance. It trades about 0.48 of its potential returns per unit of risk. IDI Insurance is currently generating about 0.16 per unit of risk. If you would invest 45,900 in Bezeq Israeli Telecommunication on August 25, 2024 and sell it today you would earn a total of 6,100 from holding Bezeq Israeli Telecommunication or generate 13.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bezeq Israeli Telecommunicatio vs. IDI Insurance
Performance |
| Timeline |
| Bezeq Israeli Teleco |
| IDI Insurance |
Bezeq Israeli and IDI Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bezeq Israeli and IDI Insurance
The main advantage of trading using opposite Bezeq Israeli and IDI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bezeq Israeli position performs unexpectedly, IDI Insurance 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 IDI Insurance will offset losses from the drop in IDI Insurance's long position.| Bezeq Israeli vs. Bank Leumi Le Israel | Bezeq Israeli vs. Teva Pharmaceutical Industries | Bezeq Israeli vs. Bank Hapoalim | Bezeq Israeli vs. Elbit Systems |
| IDI Insurance vs. Harel Insurance Investments | IDI Insurance vs. Migdal Insurance | IDI Insurance vs. Menora Miv Hld | IDI Insurance vs. The Phoenix Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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