Correlation Between Phoenix Holdings and Israel Discount

Can any of the company-specific risk be diversified away by investing in both Phoenix Holdings and Israel Discount 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 Phoenix Holdings and Israel Discount into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Phoenix Holdings and Israel Discount Bank, you can compare the effects of market volatilities on Phoenix Holdings and Israel Discount 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 Phoenix Holdings with a short position of Israel Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phoenix Holdings and Israel Discount.

Diversification Opportunities for Phoenix Holdings and Israel Discount

0.49

Correlation Coefficient

Phoenix Holdings  Israel Discount

Very weak diversification

The 3 months correlation between Phoenix and Israel is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding The Phoenix Holdings and Israel Discount Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Discount Bank and Phoenix 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 The Phoenix Holdings are associated (or correlated) with Israel Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Discount Bank has no effect on the direction of Phoenix Holdings i.e., Phoenix Holdings and Israel Discount go up and down completely randomly.

Pair Corralation between Phoenix Holdings and Israel Discount

Assuming the 90 days trading horizon Phoenix Holdings is expected to generate 2.51 times less return on investment than Israel Discount. But when comparing it to its historical volatility, The Phoenix Holdings is 1.05 times less risky than Israel Discount. It trades about 0.01 of its potential returns per unit of risk. Israel Discount Bank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  180,525  in Israel Discount Bank on January 24, 2024 and sell it today you would earn a total of  2,975  from holding Israel Discount Bank or generate 1.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

The Phoenix Holdings  vs.  Israel Discount Bank

Phoenix Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Phoenix Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Phoenix Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Israel Discount Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Discount Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Israel Discount may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Phoenix Holdings and Israel Discount

The main advantage of trading using opposite Phoenix Holdings and Israel Discount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phoenix Holdings position performs unexpectedly, Israel Discount 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 Israel Discount will offset losses from the drop in Israel Discount's long position.

The idea behind The Phoenix Holdings and Israel Discount Bank 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.