Correlation Between Israel Discount and Azrieli

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Can any of the company-specific risk be diversified away by investing in both Israel Discount and Azrieli 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 Israel Discount and Azrieli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Discount Bank and Azrieli Group, you can compare the effects of market volatilities on Israel Discount and Azrieli 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 Israel Discount with a short position of Azrieli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Azrieli.

Diversification Opportunities for Israel Discount and Azrieli

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Israel and Azrieli is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and Azrieli Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azrieli Group and Israel Discount 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 Israel Discount Bank are associated (or correlated) with Azrieli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azrieli Group has no effect on the direction of Israel Discount i.e., Israel Discount and Azrieli go up and down completely randomly.

Pair Corralation between Israel Discount and Azrieli

Assuming the 90 days trading horizon Israel Discount is expected to generate 1.1 times less return on investment than Azrieli. In addition to that, Israel Discount is 1.44 times more volatile than Azrieli Group. It trades about 0.11 of its total potential returns per unit of risk. Azrieli Group is currently generating about 0.18 per unit of volatility. If you would invest  2,558,000  in Azrieli Group on December 30, 2023 and sell it today you would earn a total of  97,000  from holding Azrieli Group or generate 3.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Israel Discount Bank  vs.  Azrieli Group

 Performance 
       Timeline  
Israel Discount Bank 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Israel Discount Bank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Israel Discount is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Azrieli Group 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Azrieli Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Azrieli may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Israel Discount and Azrieli Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Israel Discount and Azrieli

The main advantage of trading using opposite Israel Discount and Azrieli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, Azrieli 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 Azrieli will offset losses from the drop in Azrieli's long position.
The idea behind Israel Discount Bank and Azrieli Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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