Correlation Between Bezeq Israeli and Prime Energy
Can any of the company-specific risk be diversified away by investing in both Bezeq Israeli and Prime Energy 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 Prime Energy 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 Prime Energy PE, you can compare the effects of market volatilities on Bezeq Israeli and Prime Energy 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 Prime Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bezeq Israeli and Prime Energy.
Diversification Opportunities for Bezeq Israeli and Prime Energy
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bezeq and Prime is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Prime Energy PE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Energy PE 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 Prime Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Energy PE has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Prime Energy go up and down completely randomly.
Pair Corralation between Bezeq Israeli and Prime Energy
Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to generate 0.32 times more return on investment than Prime Energy. However, Bezeq Israeli Telecommunication is 3.15 times less risky than Prime Energy. It trades about 0.5 of its potential returns per unit of risk. Prime Energy PE is currently generating about 0.15 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. Prime Energy PE
Performance |
| Timeline |
| Bezeq Israeli Teleco |
| Prime Energy PE |
Bezeq Israeli and Prime Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bezeq Israeli and Prime Energy
The main advantage of trading using opposite Bezeq Israeli and Prime Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bezeq Israeli position performs unexpectedly, Prime Energy 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 Prime Energy will offset losses from the drop in Prime Energy's long position.| Bezeq Israeli vs. Tower Semiconductor | Bezeq Israeli vs. Israel Discount Bank | Bezeq Israeli vs. Holmes Place International | Bezeq Israeli vs. Nova |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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