Correlation Between Bezeq Israeli and Menif Financial

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

By analyzing existing cross correlation between Bezeq Israeli Telecommunication and Menif Financial Services, you can compare the effects of market volatilities on Bezeq Israeli and Menif Financial 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 Bezeq Israeli with a short position of Menif Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bezeq Israeli and Menif Financial.

Diversification Opportunities for Bezeq Israeli and Menif Financial

0.35

Correlation Coefficient

Bezeq Israeli  Menif Financial

Weak diversification

The 3 months correlation between Bezeq and Menif is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Menif Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Menif Financial Services and Bezeq Israeli 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 Bezeq Israeli Telecommunication are associated (or correlated) with Menif Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Menif Financial Services has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Menif Financial go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Menif Financial

Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to generate 0.71 times more return on investment than Menif Financial. However, Bezeq Israeli Telecommunication is 1.41 times less risky than Menif Financial. It trades about 0.24 of its potential returns per unit of risk. Menif Financial Services is currently generating about 0.14 per unit of risk. If you would invest  42,860  in Bezeq Israeli Telecommunication on September 29, 2024 and sell it today you would earn a total of  8,100  from holding Bezeq Israeli Telecommunication or generate 18.9% return on investment over 90 days.

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

Bezeq Israeli Telecommunicatio  vs.  Menif Financial Services

Bezeq Israeli Teleco

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bezeq Israeli Telecommunication are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bezeq Israeli sustained solid returns over the last few months and may actually be approaching a breakup point.

Menif Financial Services

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Menif Financial Services are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Menif Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bezeq Israeli and Menif Financial

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

The idea behind Bezeq Israeli Telecommunication and Menif Financial Services 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.