Correlation Between Afcon Holdings and Mizrahi Tefahot
Can any of the company-specific risk be diversified away by investing in both Afcon Holdings 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 Afcon Holdings and Mizrahi Tefahot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afcon Holdings and Mizrahi Tefahot, you can compare the effects of market volatilities on Afcon Holdings 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 Afcon Holdings with a short position of Mizrahi Tefahot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afcon Holdings and Mizrahi Tefahot.
Diversification Opportunities for Afcon Holdings and Mizrahi Tefahot
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Afcon and Mizrahi is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Afcon Holdings and Mizrahi Tefahot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mizrahi Tefahot and Afcon Holdings 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 Afcon Holdings 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 Afcon Holdings i.e., Afcon Holdings and Mizrahi Tefahot go up and down completely randomly.
Pair Corralation between Afcon Holdings and Mizrahi Tefahot
Assuming the 90 days trading horizon Afcon Holdings is expected to under-perform the Mizrahi Tefahot. But the stock apears to be less risky and, when comparing its historical volatility, Afcon Holdings is 1.9 times less risky than Mizrahi Tefahot. The stock trades about -0.16 of its potential returns per unit of risk. The Mizrahi Tefahot is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,380,000 in Mizrahi Tefahot on January 26, 2024 and sell it today you would lose (33,000) from holding Mizrahi Tefahot or give up 2.39% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Afcon Holdings vs. Mizrahi Tefahot
Performance |
Timeline |
Afcon Holdings |
Mizrahi Tefahot |
Afcon Holdings and Mizrahi Tefahot Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Afcon Holdings and Mizrahi Tefahot
The main advantage of trading using opposite Afcon Holdings and Mizrahi Tefahot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afcon Holdings 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.Afcon Holdings vs. Alony Hetz Properties | Afcon Holdings vs. Melisron | Afcon Holdings vs. Shufersal | Afcon Holdings vs. Israel Discount 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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