Correlation Between Bezeq Israeli and Matrix
Can any of the company-specific risk be diversified away by investing in both Bezeq Israeli and Matrix 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 Matrix 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 Matrix, you can compare the effects of market volatilities on Bezeq Israeli and Matrix 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 Matrix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bezeq Israeli and Matrix.
Diversification Opportunities for Bezeq Israeli and Matrix
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bezeq and Matrix is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Matrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix 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 Matrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matrix has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Matrix go up and down completely randomly.
Pair Corralation between Bezeq Israeli and Matrix
Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to under-perform the Matrix. But the stock apears to be less risky and, when comparing its historical volatility, Bezeq Israeli Telecommunication is 1.06 times less risky than Matrix. The stock trades about 0.0 of its potential returns per unit of risk. The Matrix is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 746,303 in Matrix on August 25, 2024 and sell it today you would earn a total of 57,797 from holding Matrix or generate 7.74% 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. Matrix
Performance |
| Timeline |
| Bezeq Israeli Teleco |
| Matrix |
Bezeq Israeli and Matrix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bezeq Israeli and Matrix
The main advantage of trading using opposite Bezeq Israeli and Matrix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bezeq Israeli position performs unexpectedly, Matrix 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 Matrix will offset losses from the drop in Matrix'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 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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