Correlation Between Israel Discount and FMS Enterprises
Can any of the company-specific risk be diversified away by investing in both Israel Discount and FMS Enterprises 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 FMS Enterprises 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 FMS Enterprises Migun, you can compare the effects of market volatilities on Israel Discount and FMS Enterprises 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 FMS Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and FMS Enterprises.
Diversification Opportunities for Israel Discount and FMS Enterprises
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Israel and FMS is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and FMS Enterprises Migun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FMS Enterprises Migun 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 FMS Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FMS Enterprises Migun has no effect on the direction of Israel Discount i.e., Israel Discount and FMS Enterprises go up and down completely randomly.
Pair Corralation between Israel Discount and FMS Enterprises
Assuming the 90 days trading horizon Israel Discount Bank is expected to generate 1.01 times more return on investment than FMS Enterprises. However, Israel Discount is 1.01 times more volatile than FMS Enterprises Migun. It trades about 0.07 of its potential returns per unit of risk. FMS Enterprises Migun is currently generating about 0.06 per unit of risk. If you would invest 166,435 in Israel Discount Bank on November 2, 2024 and sell it today you would earn a total of 95,565 from holding Israel Discount Bank or generate 57.42% 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. FMS Enterprises Migun
Performance |
| Timeline |
| Israel Discount Bank |
| FMS Enterprises Migun |
Israel Discount and FMS Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and FMS Enterprises
The main advantage of trading using opposite Israel Discount and FMS Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, FMS Enterprises 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 FMS Enterprises will offset losses from the drop in FMS Enterprises' long position.| Israel Discount vs. Bank Leumi Le Israel | Israel Discount vs. Bank Hapoalim | Israel Discount vs. Mizrahi Tefahot | Israel Discount vs. Bezeq Israeli Telecommunication |
| FMS Enterprises vs. Delek Automotive Systems | FMS Enterprises vs. Alony Hetz Properties | FMS Enterprises vs. Elbit Systems | FMS Enterprises vs. First International 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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