Correlation Between Mizrahi Tefahot and XTL Biopharmaceutica

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

By analyzing existing cross correlation between Mizrahi Tefahot and XTL Biopharmaceuticals, you can compare the effects of market volatilities on Mizrahi Tefahot and XTL Biopharmaceutica 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 XTL Biopharmaceutica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mizrahi Tefahot and XTL Biopharmaceutica.

Diversification Opportunities for Mizrahi Tefahot and XTL Biopharmaceutica

-0.93

Correlation Coefficient

Mizrahi Tefahot  XTL Biopharmaceutica

Pay attention - limited upside

The 3 months correlation between Mizrahi and XTL is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Mizrahi Tefahot and XTL Biopharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTL Biopharmaceuticals 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 XTL Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTL Biopharmaceuticals has no effect on the direction of Mizrahi Tefahot i.e., Mizrahi Tefahot and XTL Biopharmaceutica go up and down completely randomly.

Pair Corralation between Mizrahi Tefahot and XTL Biopharmaceutica

Assuming the 90 days trading horizon Mizrahi Tefahot is expected to generate 0.26 times more return on investment than XTL Biopharmaceutica. However, Mizrahi Tefahot is 3.92 times less risky than XTL Biopharmaceutica. It trades about -0.03 of its potential returns per unit of risk. XTL Biopharmaceuticals is currently generating about -0.13 per unit of risk. If you would invest  1,597,931  in Mizrahi Tefahot on September 26, 2024 and sell it today you would lose (11,931) from holding Mizrahi Tefahot or give up 0.75% of portfolio value over 90 days.

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

Mizrahi Tefahot  vs.  XTL Biopharmaceuticals

Mizrahi Tefahot

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mizrahi Tefahot are ranked lower than 15 (%) 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.

XTL Biopharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XTL Biopharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mizrahi Tefahot and XTL Biopharmaceutica

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

The idea behind Mizrahi Tefahot and XTL Biopharmaceuticals 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..