Correlation Between Isracard and Mizrahi Tefahot
Can any of the company-specific risk be diversified away by investing in both Isracard 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 Isracard and Mizrahi Tefahot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Isracard and Mizrahi Tefahot, you can compare the effects of market volatilities on Isracard 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 Isracard with a short position of Mizrahi Tefahot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Isracard and Mizrahi Tefahot.
Diversification Opportunities for Isracard and Mizrahi Tefahot
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Isracard and Mizrahi is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Isracard and Mizrahi Tefahot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mizrahi Tefahot and Isracard 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 Isracard 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 Isracard i.e., Isracard and Mizrahi Tefahot go up and down completely randomly.
Pair Corralation between Isracard and Mizrahi Tefahot
Assuming the 90 days trading horizon Isracard is expected to generate 1.27 times more return on investment than Mizrahi Tefahot. However, Isracard is 1.27 times more volatile than Mizrahi Tefahot. It trades about 0.05 of its potential returns per unit of risk. Mizrahi Tefahot is currently generating about 0.06 per unit of risk. If you would invest 105,301 in Isracard on August 30, 2024 and sell it today you would earn a total of 41,099 from holding Isracard or generate 39.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Isracard vs. Mizrahi Tefahot
Performance |
| Timeline |
| Isracard |
| Mizrahi Tefahot |
Isracard and Mizrahi Tefahot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Isracard and Mizrahi Tefahot
The main advantage of trading using opposite Isracard and Mizrahi Tefahot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Isracard 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.| Isracard vs. Bank Hapoalim | Isracard vs. Bank Leumi Le Israel | Isracard vs. Mizrahi Tefahot | Isracard vs. Israel Discount Bank |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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