Correlation Between Bezeq Israeli and Matrix

Can any of the company-specific risk be diversified away by investing in both Bezeq Israeli and Matrix 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 Matrix 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 Matrix, you can compare the effects of market volatilities on Bezeq Israeli and Matrix 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 Matrix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bezeq Israeli and Matrix.

Diversification Opportunities for Bezeq Israeli and Matrix

0.9

Correlation Coefficient

Bezeq Israeli  Matrix

Almost no diversification

The 3 months correlation between Bezeq and Matrix is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Matrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix 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 Matrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matrix has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Matrix go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Matrix

Assuming the 90 days trading horizon Bezeq Israeli is expected to generate 1.37 times less return on investment than Matrix. But when comparing it to its historical volatility, Bezeq Israeli Telecommunication is 1.04 times less risky than Matrix. It trades about 0.31 of its potential returns per unit of risk. Matrix is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  747,700  in Matrix on September 4, 2024 and sell it today you would earn a total of  93,800  from holding Matrix or generate 12.55% return on investment over 90 days.

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

Bezeq Israeli Telecommunicatio  vs.  Matrix

Bezeq Israeli Teleco

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bezeq Israeli Telecommunication are ranked lower than 25 (%) 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.

Matrix

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Matrix sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bezeq Israeli and Matrix

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

The idea behind Bezeq Israeli Telecommunication and Matrix 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.