Correlation Between Israel Discount and Brimag L
Can any of the company-specific risk be diversified away by investing in both Israel Discount and Brimag L 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 Israel Discount and Brimag L into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Discount Bank and Brimag L, you can compare the effects of market volatilities on Israel Discount and Brimag L 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 Israel Discount with a short position of Brimag L. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Brimag L.
Diversification Opportunities for Israel Discount and Brimag L
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Israel and Brimag is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and Brimag L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brimag L and Israel Discount 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 Israel Discount Bank are associated (or correlated) with Brimag L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brimag L has no effect on the direction of Israel Discount i.e., Israel Discount and Brimag L go up and down completely randomly.
Pair Corralation between Israel Discount and Brimag L
Assuming the 90 days trading horizon Israel Discount is expected to generate 1.45 times less return on investment than Brimag L. But when comparing it to its historical volatility, Israel Discount Bank is 1.83 times less risky than Brimag L. It trades about 0.1 of its potential returns per unit of risk. Brimag L is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 108,800 in Brimag L on September 14, 2024 and sell it today you would earn a total of 57,400 from holding Brimag L or generate 52.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Discount Bank vs. Brimag L
Performance |
| Timeline |
| Israel Discount Bank |
| Brimag L |
Israel Discount and Brimag L Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and Brimag L
The main advantage of trading using opposite Israel Discount and Brimag L positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, Brimag L 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 Brimag L will offset losses from the drop in Brimag L's long position.| Israel Discount vs. Bank Hapoalim | Israel Discount vs. Mizrahi Tefahot | Israel Discount vs. Bezeq Israeli Telecommunication | Israel Discount vs. Elbit Systems |
| Brimag L vs. Migdal Insurance | Brimag L vs. Clal Insurance Enterprises | Brimag L vs. Bank Leumi Le Israel | Brimag L vs. Israel Discount Bank |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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