Correlation Between Bezeq Israeli and Mediterranean Towers
Can any of the company-specific risk be diversified away by investing in both Bezeq Israeli and Mediterranean Towers 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 Mediterranean Towers 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 Mediterranean Towers, you can compare the effects of market volatilities on Bezeq Israeli and Mediterranean Towers 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 Mediterranean Towers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bezeq Israeli and Mediterranean Towers.
Diversification Opportunities for Bezeq Israeli and Mediterranean Towers
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bezeq and Mediterranean is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Mediterranean Towers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mediterranean Towers 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 Mediterranean Towers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mediterranean Towers has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Mediterranean Towers go up and down completely randomly.
Pair Corralation between Bezeq Israeli and Mediterranean Towers
Assuming the 90 days trading horizon Bezeq Israeli is expected to generate 1.42 times less return on investment than Mediterranean Towers. But when comparing it to its historical volatility, Bezeq Israeli Telecommunication is 1.34 times less risky than Mediterranean Towers. It trades about 0.05 of its potential returns per unit of risk. Mediterranean Towers is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 83,303 in Mediterranean Towers on September 3, 2024 and sell it today you would earn a total of 14,697 from holding Mediterranean Towers or generate 17.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bezeq Israeli Telecommunicatio vs. Mediterranean Towers
Performance |
| Timeline |
| Bezeq Israeli Teleco |
| Mediterranean Towers |
Bezeq Israeli and Mediterranean Towers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bezeq Israeli and Mediterranean Towers
The main advantage of trading using opposite Bezeq Israeli and Mediterranean Towers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bezeq Israeli position performs unexpectedly, Mediterranean Towers 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 Mediterranean Towers will offset losses from the drop in Mediterranean Towers' 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 |
| Mediterranean Towers vs. Israel Canada | Mediterranean Towers vs. Alony Hetz Properties | Mediterranean Towers vs. Bank Hapoalim | Mediterranean Towers vs. Mizrahi Tefahot |
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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