Correlation Between Israel Opportunity and B Communications
Can any of the company-specific risk be diversified away by investing in both Israel Opportunity and B Communications 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 Opportunity and B Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Opportunity and B Communications, you can compare the effects of market volatilities on Israel Opportunity and B Communications 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 Opportunity with a short position of B Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Opportunity and B Communications.
Diversification Opportunities for Israel Opportunity and B Communications
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Israel and BCOM is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Israel Opportunity and B Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Communications and Israel Opportunity 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 Opportunity are associated (or correlated) with B Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Communications has no effect on the direction of Israel Opportunity i.e., Israel Opportunity and B Communications go up and down completely randomly.
Pair Corralation between Israel Opportunity and B Communications
Assuming the 90 days trading horizon Israel Opportunity is expected to under-perform the B Communications. But the stock apears to be less risky and, when comparing its historical volatility, Israel Opportunity is 1.23 times less risky than B Communications. The stock trades about -0.12 of its potential returns per unit of risk. The B Communications is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 130,000 in B Communications on August 29, 2024 and sell it today you would earn a total of 38,100 from holding B Communications or generate 29.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Opportunity vs. B Communications
Performance |
| Timeline |
| Israel Opportunity |
| B Communications |
Israel Opportunity and B Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Opportunity and B Communications
The main advantage of trading using opposite Israel Opportunity and B Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Opportunity position performs unexpectedly, B Communications 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 B Communications will offset losses from the drop in B Communications' long position.| Israel Opportunity vs. Lapidoth | Israel Opportunity vs. Ilex Medical | Israel Opportunity vs. Aerodrome Group | Israel Opportunity vs. Opal Balance |
| B Communications vs. Bezeq Israeli Telecommunication | B Communications vs. Tower Semiconductor | B Communications vs. Israel Discount Bank | B Communications vs. Holmes Place International |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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