Correlation Between Israel Discount and Israel Land
Can any of the company-specific risk be diversified away by investing in both Israel Discount and Israel Land 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 Israel Land 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 The Israel Land, you can compare the effects of market volatilities on Israel Discount and Israel Land 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 Israel Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Israel Land.
Diversification Opportunities for Israel Discount and Israel Land
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Israel and Israel is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and The Israel Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Land 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 Israel Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Land has no effect on the direction of Israel Discount i.e., Israel Discount and Israel Land go up and down completely randomly.
Pair Corralation between Israel Discount and Israel Land
Assuming the 90 days trading horizon Israel Discount is expected to generate 1.55 times less return on investment than Israel Land. But when comparing it to its historical volatility, Israel Discount Bank is 2.16 times less risky than Israel Land. It trades about 0.48 of its potential returns per unit of risk. The Israel Land is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 74,000 in The Israel Land on September 1, 2024 and sell it today you would earn a total of 10,990 from holding The Israel Land or generate 14.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Discount Bank vs. The Israel Land
Performance |
| Timeline |
| Israel Discount Bank |
| Israel Land |
Israel Discount and Israel Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and Israel Land
The main advantage of trading using opposite Israel Discount and Israel Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, Israel Land 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 Israel Land will offset losses from the drop in Israel Land's long position.| Israel Discount vs. Menif Financial Services | Israel Discount vs. Accel Solutions Group | Israel Discount vs. Rani Zim Shopping | Israel Discount vs. Rapac Communication Infrastructure |
| Israel Land vs. Elbit Medical Technologies | Israel Land vs. Retailors | Israel Land vs. Multi Retail Group | Israel Land vs. Amanet Management Systems |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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