Correlation Between Cellcom Israel and B Communications
Can any of the company-specific risk be diversified away by investing in both Cellcom Israel and B Communications 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 Cellcom Israel and B Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cellcom Israel and B Communications, you can compare the effects of market volatilities on Cellcom Israel and B Communications 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 Cellcom Israel with a short position of B Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cellcom Israel and B Communications.
Diversification Opportunities for Cellcom Israel and B Communications
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cellcom and BCOM is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cellcom Israel and B Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Communications and Cellcom Israel 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 Cellcom Israel are associated (or correlated) with B Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Communications has no effect on the direction of Cellcom Israel i.e., Cellcom Israel and B Communications go up and down completely randomly.
Pair Corralation between Cellcom Israel and B Communications
Assuming the 90 days trading horizon Cellcom Israel is expected to generate 0.96 times more return on investment than B Communications. However, Cellcom Israel is 1.04 times less risky than B Communications. It trades about 0.02 of its potential returns per unit of risk. B Communications is currently generating about 0.01 per unit of risk. If you would invest 169,400 in Cellcom Israel on August 28, 2024 and sell it today you would earn a total of 20,400 from holding Cellcom Israel or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cellcom Israel vs. B Communications
Performance |
| Timeline |
| Cellcom Israel |
| B Communications |
Cellcom Israel and B Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cellcom Israel and B Communications
The main advantage of trading using opposite Cellcom Israel and B Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cellcom Israel position performs unexpectedly, B Communications 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 B Communications will offset losses from the drop in B Communications' long position.| Cellcom Israel vs. Bank Leumi Le Israel | Cellcom Israel vs. Teva Pharmaceutical Industries | Cellcom Israel vs. Bank Hapoalim | Cellcom Israel vs. Elbit Systems |
| B Communications vs. Bezeq Israeli Telecommunication | B Communications vs. Partner | B Communications vs. Cellcom Israel | B Communications vs. Tower Semiconductor |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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