Correlation Between Global Knafaim and Meitav Trade

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

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

Diversification Opportunities for Global Knafaim and Meitav Trade

0.75

Correlation Coefficient

Global Knafaim  Meitav Trade

Poor diversification

The 3 months correlation between Global and Meitav is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Global Knafaim Leasing 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 Global Knafaim 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 Global Knafaim Leasing 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 Global Knafaim i.e., Global Knafaim and Meitav Trade go up and down completely randomly.

Pair Corralation between Global Knafaim and Meitav Trade

Assuming the 90 days trading horizon Global Knafaim is expected to generate 1.42 times less return on investment than Meitav Trade. In addition to that, Global Knafaim is 1.71 times more volatile than Meitav Trade Inv. It trades about 0.17 of its total potential returns per unit of risk. Meitav Trade Inv is currently generating about 0.42 per unit of volatility. If you would invest  83,512  in Meitav Trade Inv on September 29, 2024 and sell it today you would earn a total of  28,288  from holding Meitav Trade Inv or generate 33.87% return on investment over 90 days.

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

Global Knafaim Leasing  vs.  Meitav Trade Inv

Global Knafaim Leasing

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Knafaim Leasing are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Global Knafaim sustained solid returns over the last few months and may actually be approaching a breakup point.

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 Global Knafaim and Meitav Trade

The main advantage of trading using opposite Global Knafaim and Meitav Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Knafaim 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 Global Knafaim Leasing 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..