Correlation Between Dan Hotels and Meitav Trade

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

By analyzing existing cross correlation between Dan Hotels and Meitav Trade Inv, you can compare the effects of market volatilities on Dan Hotels and Meitav Trade 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 Dan Hotels with a short position of Meitav Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dan Hotels and Meitav Trade.

Diversification Opportunities for Dan Hotels and Meitav Trade

-0.67

Correlation Coefficient

Dan Hotels  Meitav Trade

Excellent diversification

The 3 months correlation between Dan and Meitav is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dan Hotels and Meitav Trade Inv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meitav Trade Inv and Dan Hotels 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 Dan Hotels are associated (or correlated) with Meitav Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meitav Trade Inv has no effect on the direction of Dan Hotels i.e., Dan Hotels and Meitav Trade go up and down completely randomly.

Pair Corralation between Dan Hotels and Meitav Trade

Assuming the 90 days trading horizon Dan Hotels is expected to generate 21.19 times less return on investment than Meitav Trade. In addition to that, Dan Hotels is 1.16 times more volatile than Meitav Trade Inv. It trades about 0.01 of its total potential returns per unit of risk. Meitav Trade Inv is currently generating about 0.33 per unit of volatility. If you would invest  70,407  in Meitav Trade Inv on September 29, 2024 and sell it today you would earn a total of  41,393  from holding Meitav Trade Inv or generate 58.79% return on investment over 90 days.

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

Dan Hotels  vs.  Meitav Trade Inv

Dan Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dan Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Meitav Trade Inv

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Meitav Trade Inv are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Meitav Trade sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dan Hotels and Meitav Trade

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

The idea behind Dan Hotels and Meitav Trade Inv 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.