Correlation Between Brand and Bezeq Israeli
Can any of the company-specific risk be diversified away by investing in both Brand and Bezeq Israeli 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 Brand and Bezeq Israeli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brand Group and Bezeq Israeli Telecommunication, you can compare the effects of market volatilities on Brand and Bezeq Israeli 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 Brand with a short position of Bezeq Israeli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brand and Bezeq Israeli.
Diversification Opportunities for Brand and Bezeq Israeli
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Brand and Bezeq is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Brand Group and Bezeq Israeli Telecommunicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bezeq Israeli Teleco and Brand 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 Brand Group are associated (or correlated) with Bezeq Israeli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bezeq Israeli Teleco has no effect on the direction of Brand i.e., Brand and Bezeq Israeli go up and down completely randomly.
Pair Corralation between Brand and Bezeq Israeli
Assuming the 90 days trading horizon Brand Group is expected to under-perform the Bezeq Israeli. In addition to that, Brand is 1.52 times more volatile than Bezeq Israeli Telecommunication. It trades about -0.56 of its total potential returns per unit of risk. Bezeq Israeli Telecommunication is currently generating about -0.06 per unit of volatility. If you would invest 48,000 in Bezeq Israeli Telecommunication on January 25, 2024 and sell it today you would lose (930.00) from holding Bezeq Israeli Telecommunication or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brand Group vs. Bezeq Israeli Telecommunicatio
Performance |
| Timeline |
| Brand Group |
| Bezeq Israeli Teleco |
Brand and Bezeq Israeli Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brand and Bezeq Israeli
The main advantage of trading using opposite Brand and Bezeq Israeli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brand position performs unexpectedly, Bezeq Israeli 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 Bezeq Israeli will offset losses from the drop in Bezeq Israeli's long position.The idea behind Brand Group and Bezeq Israeli Telecommunication 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.| Bezeq Israeli vs. Partner | Bezeq Israeli vs. Tower Semiconductor | Bezeq Israeli 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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