Correlation Between Itay Financial and Israel Discount
Can any of the company-specific risk be diversified away by investing in both Itay Financial and Israel Discount 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 Itay Financial and Israel Discount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itay Financial AA and Israel Discount Bank, you can compare the effects of market volatilities on Itay Financial and Israel Discount 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 Itay Financial with a short position of Israel Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itay Financial and Israel Discount.
Diversification Opportunities for Itay Financial and Israel Discount
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Itay and Israel is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Itay Financial AA and Israel Discount Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Discount Bank and Itay Financial 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 Itay Financial AA are associated (or correlated) with Israel Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Discount Bank has no effect on the direction of Itay Financial i.e., Itay Financial and Israel Discount go up and down completely randomly.
Pair Corralation between Itay Financial and Israel Discount
Assuming the 90 days trading horizon Itay Financial AA is expected to generate 3.48 times more return on investment than Israel Discount. However, Itay Financial is 3.48 times more volatile than Israel Discount Bank. It trades about 0.12 of its potential returns per unit of risk. Israel Discount Bank is currently generating about 0.19 per unit of risk. If you would invest 23,900 in Itay Financial AA on September 13, 2024 and sell it today you would earn a total of 15,000 from holding Itay Financial AA or generate 62.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Itay Financial AA vs. Israel Discount Bank
Performance |
| Timeline |
| Itay Financial AA |
| Israel Discount Bank |
Itay Financial and Israel Discount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itay Financial and Israel Discount
The main advantage of trading using opposite Itay Financial and Israel Discount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itay Financial position performs unexpectedly, Israel Discount 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 Discount will offset losses from the drop in Israel Discount's long position.| Itay Financial vs. Direct Capital Investments | Itay Financial vs. Netz Hotels | Itay Financial vs. Opal Balance | Itay Financial vs. B Communications |
| Israel Discount vs. Bank Leumi Le Israel | Israel Discount vs. Bank Hapoalim | Israel Discount vs. Mizrahi Tefahot | Israel Discount vs. Bezeq Israeli Telecommunication |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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