Correlation Between Israel Discount and Mizrahi Tefahot
Can any of the company-specific risk be diversified away by investing in both Israel Discount and Mizrahi Tefahot 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 Mizrahi Tefahot 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 Mizrahi Tefahot, you can compare the effects of market volatilities on Israel Discount and Mizrahi Tefahot 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 Mizrahi Tefahot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Mizrahi Tefahot.
Diversification Opportunities for Israel Discount and Mizrahi Tefahot
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Israel and Mizrahi is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and Mizrahi Tefahot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mizrahi Tefahot 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 Mizrahi Tefahot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mizrahi Tefahot has no effect on the direction of Israel Discount i.e., Israel Discount and Mizrahi Tefahot go up and down completely randomly.
Pair Corralation between Israel Discount and Mizrahi Tefahot
Assuming the 90 days trading horizon Israel Discount is expected to generate 2.22 times less return on investment than Mizrahi Tefahot. In addition to that, Israel Discount is 1.12 times more volatile than Mizrahi Tefahot. It trades about 0.1 of its total potential returns per unit of risk. Mizrahi Tefahot is currently generating about 0.25 per unit of volatility. If you would invest 1,628,000 in Mizrahi Tefahot on November 4, 2024 and sell it today you would earn a total of 77,000 from holding Mizrahi Tefahot or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Discount Bank vs. Mizrahi Tefahot
Performance |
| Timeline |
| Israel Discount Bank |
| Mizrahi Tefahot |
Israel Discount and Mizrahi Tefahot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and Mizrahi Tefahot
The main advantage of trading using opposite Israel Discount and Mizrahi Tefahot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, Mizrahi Tefahot 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 Mizrahi Tefahot will offset losses from the drop in Mizrahi Tefahot's 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 |
| Mizrahi Tefahot vs. Bank Leumi Le Israel | Mizrahi Tefahot vs. Bank Hapoalim | Mizrahi Tefahot vs. Israel Discount Bank | Mizrahi Tefahot 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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