Correlation Between GFC Green and Mizrahi Tefahot
Can any of the company-specific risk be diversified away by investing in both GFC Green 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 GFC Green and Mizrahi Tefahot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFC Green Fields and Mizrahi Tefahot, you can compare the effects of market volatilities on GFC Green 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 GFC Green with a short position of Mizrahi Tefahot. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFC Green and Mizrahi Tefahot.
Diversification Opportunities for GFC Green and Mizrahi Tefahot
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between GFC and Mizrahi is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding GFC Green Fields and Mizrahi Tefahot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mizrahi Tefahot and GFC Green 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 GFC Green Fields 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 GFC Green i.e., GFC Green and Mizrahi Tefahot go up and down completely randomly.
Pair Corralation between GFC Green and Mizrahi Tefahot
Assuming the 90 days trading horizon GFC Green Fields is expected to generate 0.95 times more return on investment than Mizrahi Tefahot. However, GFC Green Fields is 1.05 times less risky than Mizrahi Tefahot. It trades about -0.01 of its potential returns per unit of risk. Mizrahi Tefahot is currently generating about -0.05 per unit of risk. If you would invest 111,100 in GFC Green Fields on January 26, 2024 and sell it today you would lose (1,100) from holding GFC Green Fields or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFC Green Fields vs. Mizrahi Tefahot
Performance |
| Timeline |
| GFC Green Fields |
| Mizrahi Tefahot |
GFC Green and Mizrahi Tefahot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFC Green and Mizrahi Tefahot
The main advantage of trading using opposite GFC Green and Mizrahi Tefahot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFC Green 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.The idea behind GFC Green Fields and Mizrahi Tefahot 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.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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