Correlation Between Bezeq Israeli and Paz Oil
Can any of the company-specific risk be diversified away by investing in both Bezeq Israeli and Paz Oil 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 Paz Oil 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 Paz Oil, you can compare the effects of market volatilities on Bezeq Israeli and Paz Oil 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 Paz Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bezeq Israeli and Paz Oil.
Diversification Opportunities for Bezeq Israeli and Paz Oil
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bezeq and Paz is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Paz Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paz Oil 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 Paz Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paz Oil has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Paz Oil go up and down completely randomly.
Pair Corralation between Bezeq Israeli and Paz Oil
Assuming the 90 days trading horizon Bezeq Israeli is expected to generate 106.42 times less return on investment than Paz Oil. But when comparing it to its historical volatility, Bezeq Israeli Telecommunication is 1.23 times less risky than Paz Oil. It trades about 0.0 of its potential returns per unit of risk. Paz Oil is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,926,402 in Paz Oil on August 27, 2024 and sell it today you would earn a total of 1,473,598 from holding Paz Oil or generate 50.36% 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. Paz Oil
Performance |
| Timeline |
| Bezeq Israeli Teleco |
| Paz Oil |
Bezeq Israeli and Paz Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bezeq Israeli and Paz Oil
The main advantage of trading using opposite Bezeq Israeli and Paz Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bezeq Israeli position performs unexpectedly, Paz Oil 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 Paz Oil will offset losses from the drop in Paz Oil'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 |
| Paz Oil vs. Delek Group | Paz Oil vs. Bank Hapoalim | Paz Oil vs. Oil Refineries | Paz Oil vs. Bezeq Israeli Telecommunication |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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