Correlation Between Mizrahi Tefahot and Jerusalem
Can any of the company-specific risk be diversified away by investing in both Mizrahi Tefahot and Jerusalem 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 Mizrahi Tefahot and Jerusalem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mizrahi Tefahot and Jerusalem, you can compare the effects of market volatilities on Mizrahi Tefahot and Jerusalem 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 Mizrahi Tefahot with a short position of Jerusalem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mizrahi Tefahot and Jerusalem.
Diversification Opportunities for Mizrahi Tefahot and Jerusalem
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mizrahi and Jerusalem is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Mizrahi Tefahot and Jerusalem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jerusalem and Mizrahi Tefahot 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 Mizrahi Tefahot are associated (or correlated) with Jerusalem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jerusalem has no effect on the direction of Mizrahi Tefahot i.e., Mizrahi Tefahot and Jerusalem go up and down completely randomly.
Pair Corralation between Mizrahi Tefahot and Jerusalem
Assuming the 90 days trading horizon Mizrahi Tefahot is expected to under-perform the Jerusalem. In addition to that, Mizrahi Tefahot is 1.46 times more volatile than Jerusalem. It trades about -0.08 of its total potential returns per unit of risk. Jerusalem is currently generating about 0.04 per unit of volatility. If you would invest 133,981 in Jerusalem on January 24, 2024 and sell it today you would earn a total of 1,319 from holding Jerusalem or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mizrahi Tefahot vs. Jerusalem
Performance |
| Timeline |
| Mizrahi Tefahot |
| Jerusalem |
Mizrahi Tefahot and Jerusalem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mizrahi Tefahot and Jerusalem
The main advantage of trading using opposite Mizrahi Tefahot and Jerusalem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mizrahi Tefahot position performs unexpectedly, Jerusalem 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 Jerusalem will offset losses from the drop in Jerusalem's long position.| Mizrahi Tefahot vs. Bank Leumi Le Israel | Mizrahi Tefahot vs. Bank Hapoalim | Mizrahi Tefahot vs. Israel Discount Bank | Mizrahi Tefahot vs. First International Bank |
| Jerusalem vs. Mizrahi Tefahot | Jerusalem vs. First International Bank | Jerusalem vs. Israel Discount Bank | Jerusalem vs. Bank Leumi Le Israel |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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