Correlation Between Schweizerische Nationalbank and Israel Discount

Can any of the company-specific risk be diversified away by investing in both Schweizerische Nationalbank and Israel Discount 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 Schweizerische Nationalbank and Israel Discount into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Schweizerische Nationalbank and Israel Discount Bank, you can compare the effects of market volatilities on Schweizerische Nationalbank and Israel Discount 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 Schweizerische Nationalbank with a short position of Israel Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schweizerische Nationalbank and Israel Discount.

Diversification Opportunities for Schweizerische Nationalbank and Israel Discount

-0.36

Correlation Coefficient

Schweizerische Nationalbank  Israel Discount

Very good diversification

The 3 months correlation between Schweizerische and Israel is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Schweizerische Nationalbank and Israel Discount Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Discount Bank and Schweizerische Nationalbank 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 Schweizerische Nationalbank are associated (or correlated) with Israel Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Discount Bank has no effect on the direction of Schweizerische Nationalbank i.e., Schweizerische Nationalbank and Israel Discount go up and down completely randomly.

Pair Corralation between Schweizerische Nationalbank and Israel Discount

Assuming the 90 days horizon Schweizerische Nationalbank is expected to under-perform the Israel Discount. But the pink sheet apears to be less risky and, when comparing its historical volatility, Schweizerische Nationalbank is 3.38 times less risky than Israel Discount. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Israel Discount Bank is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,580  in Israel Discount Bank on August 31, 2024 and sell it today you would earn a total of  1,239  from holding Israel Discount Bank or generate 27.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	74.87%
Values	Daily Returns

Schweizerische Nationalbank  vs.  Israel Discount Bank

Schweizerische Nationalbank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schweizerische Nationalbank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Israel Discount Bank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Discount Bank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Israel Discount may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Schweizerische Nationalbank and Israel Discount

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

The idea behind Schweizerische Nationalbank and Israel Discount Bank 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.