Correlation Between Tel Aviv and MeguREIT Israel
Can any of the company-specific risk be diversified away by investing in both Tel Aviv and MeguREIT Israel 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 Tel Aviv and MeguREIT Israel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tel Aviv 35 and MeguREIT Israel, you can compare the effects of market volatilities on Tel Aviv and MeguREIT Israel 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 Tel Aviv with a short position of MeguREIT Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tel Aviv and MeguREIT Israel.
Diversification Opportunities for Tel Aviv and MeguREIT Israel
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tel and MeguREIT is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Tel Aviv 35 and MeguREIT Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MeguREIT Israel and Tel Aviv 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 Tel Aviv 35 are associated (or correlated) with MeguREIT Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MeguREIT Israel has no effect on the direction of Tel Aviv i.e., Tel Aviv and MeguREIT Israel go up and down completely randomly.
Pair Corralation between Tel Aviv and MeguREIT Israel
Assuming the 90 days trading horizon Tel Aviv is expected to generate 1.47 times less return on investment than MeguREIT Israel. But when comparing it to its historical volatility, Tel Aviv 35 is 2.75 times less risky than MeguREIT Israel. It trades about 0.16 of its potential returns per unit of risk. MeguREIT Israel is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 39,915 in MeguREIT Israel on August 29, 2024 and sell it today you would earn a total of 14,085 from holding MeguREIT Israel or generate 35.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tel Aviv 35 vs. MeguREIT Israel
Performance |
| Timeline |
Tel Aviv and MeguREIT Israel Volatility Contrast
Predicted Return Density |
| Returns |
Tel Aviv 35
Pair trading matchups for Tel Aviv
MeguREIT Israel
Pair trading matchups for MeguREIT Israel
Pair Trading with Tel Aviv and MeguREIT Israel
The main advantage of trading using opposite Tel Aviv and MeguREIT Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tel Aviv position performs unexpectedly, MeguREIT Israel 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 MeguREIT Israel will offset losses from the drop in MeguREIT Israel's long position.| Tel Aviv vs. One Software Technologies | Tel Aviv vs. Rapac Communication Infrastructure | Tel Aviv vs. Teuza A Fairchild | Tel Aviv vs. Magic Software Enterprises |
| MeguREIT Israel vs. Reit 1 | MeguREIT Israel vs. Sella Real Estate | MeguREIT Israel vs. Menivim The New | MeguREIT Israel vs. Azrieli Group |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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