Correlation Between Mizrahi Tefahot and Nala Digital

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

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

Diversification Opportunities for Mizrahi Tefahot and Nala Digital

0.88

Correlation Coefficient

Mizrahi Tefahot  Nala Digital

Very poor diversification

The 3 months correlation between Mizrahi and Nala is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Mizrahi Tefahot and Nala Digital Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nala Digital Commerce and Mizrahi Tefahot 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 Mizrahi Tefahot are associated (or correlated) with Nala Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nala Digital Commerce has no effect on the direction of Mizrahi Tefahot i.e., Mizrahi Tefahot and Nala Digital go up and down completely randomly.

Pair Corralation between Mizrahi Tefahot and Nala Digital

Assuming the 90 days trading horizon Mizrahi Tefahot is expected to generate 71.57 times less return on investment than Nala Digital. But when comparing it to its historical volatility, Mizrahi Tefahot is 105.64 times less risky than Nala Digital. It trades about 0.24 of its potential returns per unit of risk. Nala Digital Commerce is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,010  in Nala Digital Commerce on September 24, 2024 and sell it today you would earn a total of  55,990  from holding Nala Digital Commerce or generate 2785.57% return on investment over 90 days.

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

Mizrahi Tefahot  vs.  Nala Digital Commerce

Mizrahi Tefahot

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mizrahi Tefahot are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mizrahi Tefahot sustained solid returns over the last few months and may actually be approaching a breakup point.

Nala Digital Commerce

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Mizrahi Tefahot and Nala Digital

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

The idea behind Mizrahi Tefahot and Nala Digital Commerce 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.