Correlation Between Azrieli and IBI Mutual

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

By analyzing existing cross correlation between Azrieli Group and IBI Mutual Funds, you can compare the effects of market volatilities on Azrieli and IBI Mutual 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 Azrieli with a short position of IBI Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azrieli and IBI Mutual.

Diversification Opportunities for Azrieli and IBI Mutual

0.76

Correlation Coefficient

Azrieli  IBI Mutual

Poor diversification

The 3 months correlation between Azrieli and IBI is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Azrieli Group and IBI Mutual Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBI Mutual Funds and Azrieli 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 Azrieli Group are associated (or correlated) with IBI Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBI Mutual Funds has no effect on the direction of Azrieli i.e., Azrieli and IBI Mutual go up and down completely randomly.

Pair Corralation between Azrieli and IBI Mutual

Assuming the 90 days trading horizon Azrieli Group is expected to generate 0.48 times more return on investment than IBI Mutual. However, Azrieli Group is 2.1 times less risky than IBI Mutual. It trades about 0.06 of its potential returns per unit of risk. IBI Mutual Funds is currently generating about -0.12 per unit of risk. If you would invest  2,899,000  in Azrieli Group on September 25, 2024 and sell it today you would earn a total of  30,000  from holding Azrieli Group or generate 1.03% return on investment over 90 days.

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

Azrieli Group  vs.  IBI Mutual Funds

Azrieli Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Azrieli Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Azrieli sustained solid returns over the last few months and may actually be approaching a breakup point.

IBI Mutual Funds

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IBI Mutual Funds are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, IBI Mutual may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Azrieli and IBI Mutual

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

The idea behind Azrieli Group and IBI Mutual Funds 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.