Correlation Between Menora Miv and Mizrahi Tefahot

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

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

Diversification Opportunities for Menora Miv and Mizrahi Tefahot

0.91

Correlation Coefficient

Menora Miv  Mizrahi Tefahot

Almost no diversification

The 3 months correlation between Menora and Mizrahi is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Menora Miv Hld and Mizrahi Tefahot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mizrahi Tefahot and Menora Miv 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 Menora Miv Hld are associated (or correlated) with Mizrahi Tefahot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mizrahi Tefahot has no effect on the direction of Menora Miv i.e., Menora Miv and Mizrahi Tefahot go up and down completely randomly.

Pair Corralation between Menora Miv and Mizrahi Tefahot

Assuming the 90 days trading horizon Menora Miv Hld is expected to generate 1.03 times more return on investment than Mizrahi Tefahot. However, Menora Miv is 1.03 times more volatile than Mizrahi Tefahot. It trades about 0.11 of its potential returns per unit of risk. Mizrahi Tefahot is currently generating about 0.06 per unit of risk. If you would invest  657,205  in Menora Miv Hld on September 28, 2024 and sell it today you would earn a total of  768,795  from holding Menora Miv Hld or generate 116.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.74%
Values	Daily Returns

Menora Miv Hld  vs.  Mizrahi Tefahot

Menora Miv Hld

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Menora Miv Hld are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Menora Miv sustained solid returns over the last few months and may actually be approaching a breakup point.

Mizrahi Tefahot

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mizrahi Tefahot are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mizrahi Tefahot may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Menora Miv and Mizrahi Tefahot

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

The idea behind Menora Miv Hld and Mizrahi Tefahot 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.