Correlation Between Bezeq Israeli and Wesure Global

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

Diversification Opportunities for Bezeq Israeli and Wesure Global

0.97

Correlation Coefficient

Bezeq Israeli  Wesure Global

Almost no diversification

The 3 months correlation between Bezeq and Wesure is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Wesure Global Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesure Global Tech 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 Wesure Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesure Global Tech has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Wesure Global go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Wesure Global

Assuming the 90 days trading horizon Bezeq Israeli is expected to generate 2.03 times less return on investment than Wesure Global. But when comparing it to its historical volatility, Bezeq Israeli Telecommunication is 1.54 times less risky than Wesure Global. It trades about 0.37 of its potential returns per unit of risk. Wesure Global Tech is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest  30,330  in Wesure Global Tech on September 15, 2024 and sell it today you would earn a total of  22,640  from holding Wesure Global Tech or generate 74.65% 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.  Wesure Global Tech

Bezeq Israeli Teleco

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bezeq Israeli Telecommunication are ranked lower than 29 (%) 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.

Wesure Global Tech

Risk-Adjusted Performance

38 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Wesure Global Tech are ranked lower than 38 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wesure Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bezeq Israeli and Wesure Global

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

The idea behind Bezeq Israeli Telecommunication and Wesure Global Tech 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.