Correlation Between Paz Oil and Bezeq Israeli

Can any of the company-specific risk be diversified away by investing in both Paz Oil and Bezeq Israeli 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 Paz Oil and Bezeq Israeli into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Paz Oil and Bezeq Israeli Telecommunication, you can compare the effects of market volatilities on Paz Oil and Bezeq Israeli 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 Paz Oil with a short position of Bezeq Israeli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paz Oil and Bezeq Israeli.

Diversification Opportunities for Paz Oil and Bezeq Israeli

0.95

Correlation Coefficient

Paz Oil  Bezeq Israeli

Almost no diversification

The 3 months correlation between Paz and Bezeq is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Paz Oil and Bezeq Israeli Telecommunicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bezeq Israeli Teleco and Paz Oil 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 Paz Oil are associated (or correlated) with Bezeq Israeli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bezeq Israeli Teleco has no effect on the direction of Paz Oil i.e., Paz Oil and Bezeq Israeli go up and down completely randomly.

Pair Corralation between Paz Oil and Bezeq Israeli

Assuming the 90 days trading horizon Paz Oil is expected to generate 1.22 times more return on investment than Bezeq Israeli. However, Paz Oil is 1.22 times more volatile than Bezeq Israeli Telecommunication. It trades about 0.08 of its potential returns per unit of risk. Bezeq Israeli Telecommunication is currently generating about 0.01 per unit of risk. If you would invest  2,648,761  in Paz Oil on September 25, 2024 and sell it today you would earn a total of  1,841,239  from holding Paz Oil or generate 69.51% return on investment over 90 days.

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

Paz Oil  vs.  Bezeq Israeli Telecommunicatio

Paz Oil

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Paz Oil are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Paz Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

Bezeq Israeli Teleco

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bezeq Israeli Telecommunication are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bezeq Israeli sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paz Oil and Bezeq Israeli

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

The idea behind Paz Oil and Bezeq Israeli Telecommunication 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.