Correlation Between Meitav Trade and Global Knafaim

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

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

Diversification Opportunities for Meitav Trade and Global Knafaim

0.75

Correlation Coefficient

Meitav Trade  Global Knafaim

Poor diversification

The 3 months correlation between Meitav and Global is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Meitav Trade Inv and Global Knafaim Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Knafaim Leasing and Meitav Trade 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 Meitav Trade Inv are associated (or correlated) with Global Knafaim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Knafaim Leasing has no effect on the direction of Meitav Trade i.e., Meitav Trade and Global Knafaim go up and down completely randomly.

Pair Corralation between Meitav Trade and Global Knafaim

Assuming the 90 days trading horizon Meitav Trade Inv is expected to generate 0.58 times more return on investment than Global Knafaim. However, Meitav Trade Inv is 1.71 times less risky than Global Knafaim. It trades about 0.42 of its potential returns per unit of risk. Global Knafaim Leasing is currently generating about 0.17 per unit of risk. 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

Meitav Trade Inv  vs.  Global Knafaim Leasing

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.

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.

Pair Trading with Meitav Trade and Global Knafaim

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

The idea behind Meitav Trade Inv and Global Knafaim Leasing 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.