Correlation Between Bezeq Israeli and Partner
Can any of the company-specific risk be diversified away by investing in both Bezeq Israeli and Partner 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 Partner 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 Partner, you can compare the effects of market volatilities on Bezeq Israeli and Partner 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 Partner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bezeq Israeli and Partner.
Diversification Opportunities for Bezeq Israeli and Partner
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bezeq and Partner is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Partner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partner 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 Partner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partner has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Partner go up and down completely randomly.
Pair Corralation between Bezeq Israeli and Partner
Assuming the 90 days trading horizon Bezeq Israeli is expected to generate 2.11 times less return on investment than Partner. But when comparing it to its historical volatility, Bezeq Israeli Telecommunication is 1.57 times less risky than Partner. It trades about 0.05 of its potential returns per unit of risk. Partner is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 146,500 in Partner on August 31, 2024 and sell it today you would earn a total of 68,000 from holding Partner or generate 46.42% 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. Partner
Performance |
| Timeline |
| Bezeq Israeli Teleco |
| Partner |
Bezeq Israeli and Partner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bezeq Israeli and Partner
The main advantage of trading using opposite Bezeq Israeli and Partner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bezeq Israeli position performs unexpectedly, Partner 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 Partner will offset losses from the drop in Partner'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 |
| Partner vs. Israel China Biotechnology | Partner vs. The Gold Bond | Partner vs. Overseas Commerce | Partner vs. Big Tech 50 |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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