Correlation Between Israel Discount and CCSB Financial

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

Diversification Opportunities for Israel Discount and CCSB Financial

-0.69

Correlation Coefficient

Israel Discount  CCSB Financial

Excellent diversification

The 3 months correlation between Israel and CCSB is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and CCSB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCSB Financial Corp 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 CCSB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCSB Financial Corp has no effect on the direction of Israel Discount i.e., Israel Discount and CCSB Financial go up and down completely randomly.

Pair Corralation between Israel Discount and CCSB Financial

Assuming the 90 days horizon Israel Discount Bank is expected to generate 1.29 times more return on investment than CCSB Financial. However, Israel Discount is 1.29 times more volatile than CCSB Financial Corp. It trades about 0.14 of its potential returns per unit of risk. CCSB Financial Corp is currently generating about -0.13 per unit of risk. If you would invest  5,200  in Israel Discount Bank on September 5, 2024 and sell it today you would earn a total of  619.00  from holding Israel Discount Bank or generate 11.9% return on investment over 90 days.

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

Israel Discount Bank  vs.  CCSB Financial Corp

Israel Discount Bank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Discount Bank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Israel Discount may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CCSB Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CCSB Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Israel Discount and CCSB Financial

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

The idea behind Israel Discount Bank and CCSB Financial 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.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.