Correlation Between Israel Discount and Mobile Max

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

By analyzing existing cross correlation between Israel Discount Bank and Mobile Max M, you can compare the effects of market volatilities on Israel Discount and Mobile Max 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 Israel Discount with a short position of Mobile Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Mobile Max.

Diversification Opportunities for Israel Discount and Mobile Max

-0.74

Correlation Coefficient

Israel Discount  Mobile Max

Pay attention - limited upside

The 3 months correlation between Israel and Mobile is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and Mobile Max M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Max M and Israel Discount 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 Israel Discount Bank are associated (or correlated) with Mobile Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Max M has no effect on the direction of Israel Discount i.e., Israel Discount and Mobile Max go up and down completely randomly.

Pair Corralation between Israel Discount and Mobile Max

Assuming the 90 days trading horizon Israel Discount Bank is expected to generate 0.49 times more return on investment than Mobile Max. However, Israel Discount Bank is 2.02 times less risky than Mobile Max. It trades about 0.3 of its potential returns per unit of risk. Mobile Max M is currently generating about -0.02 per unit of risk. If you would invest  198,538  in Israel Discount Bank on September 25, 2024 and sell it today you would earn a total of  49,462  from holding Israel Discount Bank or generate 24.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.83%
Values	Daily Returns

Israel Discount Bank  vs.  Mobile Max M

Israel Discount Bank

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Discount Bank are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Israel Discount sustained solid returns over the last few months and may actually be approaching a breakup point.

Mobile Max M

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mobile Max M has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mobile Max is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Israel Discount and Mobile Max

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

The idea behind Israel Discount Bank and Mobile Max M 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.