Correlation Between Israel Discount and Mega Or

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

Diversification Opportunities for Israel Discount and Mega Or

0.97

Correlation Coefficient

Israel Discount  Mega Or

Almost no diversification

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

Pair Corralation between Israel Discount and Mega Or

Assuming the 90 days trading horizon Israel Discount is expected to generate 1.25 times less return on investment than Mega Or. But when comparing it to its historical volatility, Israel Discount Bank is 1.43 times less risky than Mega Or. It trades about 0.07 of its potential returns per unit of risk. Mega Or is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  760,339  in Mega Or on September 30, 2024 and sell it today you would earn a total of  361,661  from holding Mega Or or generate 47.57% return on investment over 90 days.

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

Israel Discount Bank  vs.  Mega Or

Israel Discount Bank

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Discount Bank are ranked lower than 16 (%) 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.

Mega Or

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mega Or are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mega Or sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Israel Discount and Mega Or

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

The idea behind Israel Discount Bank and Mega Or 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.