Correlation Between Isracard and Israel Corp

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

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

Diversification Opportunities for Isracard and Israel Corp

0.84

Correlation Coefficient

Isracard  Israel Corp

Very poor diversification

The 3 months correlation between Isracard and Israel is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Isracard and Israel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Corp and Isracard 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 Isracard are associated (or correlated) with Israel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Corp has no effect on the direction of Isracard i.e., Isracard and Israel Corp go up and down completely randomly.

Pair Corralation between Isracard and Israel Corp

Assuming the 90 days trading horizon Isracard is expected to generate 1.52 times less return on investment than Israel Corp. But when comparing it to its historical volatility, Isracard is 2.1 times less risky than Israel Corp. It trades about 0.24 of its potential returns per unit of risk. Israel Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  8,082,000  in Israel Corp on September 26, 2024 and sell it today you would earn a total of  1,444,000  from holding Israel Corp or generate 17.87% return on investment over 90 days.

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

Isracard  vs.  Israel Corp

Isracard

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Isracard are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Isracard sustained solid returns over the last few months and may actually be approaching a breakup point.

Israel Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Israel Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Isracard and Israel Corp

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

The idea behind Isracard and Israel Corp 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.