Correlation Between Psagot Index and Mivne Real

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Can any of the company-specific risk be diversified away by investing in both Psagot Index and Mivne Real 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 Psagot Index and Mivne Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Psagot Index Funds and Mivne Real Estate, you can compare the effects of market volatilities on Psagot Index and Mivne Real 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 Psagot Index with a short position of Mivne Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Psagot Index and Mivne Real.

Diversification Opportunities for Psagot Index and Mivne Real

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Psagot and Mivne is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Psagot Index Funds and Mivne Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mivne Real Estate and Psagot Index 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 Psagot Index Funds are associated (or correlated) with Mivne Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mivne Real Estate has no effect on the direction of Psagot Index i.e., Psagot Index and Mivne Real go up and down completely randomly.

Pair Corralation between Psagot Index and Mivne Real

Assuming the 90 days trading horizon Psagot Index Funds is expected to generate 0.32 times more return on investment than Mivne Real. However, Psagot Index Funds is 3.11 times less risky than Mivne Real. It trades about 0.06 of its potential returns per unit of risk. Mivne Real Estate is currently generating about 0.02 per unit of risk. If you would invest  876,800  in Psagot Index Funds on September 12, 2024 and sell it today you would earn a total of  149,800  from holding Psagot Index Funds or generate 17.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.74%
ValuesDaily Returns

Psagot Index Funds  vs.  Mivne Real Estate

 Performance 
       Timeline  
Psagot Index Funds 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Psagot Index Funds has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Psagot Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Mivne Real Estate 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Mivne Real Estate are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mivne Real sustained solid returns over the last few months and may actually be approaching a breakup point.

Psagot Index and Mivne Real Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Psagot Index and Mivne Real

The main advantage of trading using opposite Psagot Index and Mivne Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Psagot Index position performs unexpectedly, Mivne Real 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 Mivne Real will offset losses from the drop in Mivne Real's long position.
The idea behind Psagot Index Funds and Mivne Real Estate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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