Correlation Between Air Transport and Menora Mivtachim

Can any of the company-specific risk be diversified away by investing in both Air Transport and Menora Mivtachim 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 Air Transport and Menora Mivtachim into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Transport Services and Menora Mivtachim Holdings, you can compare the effects of market volatilities on Air Transport and Menora Mivtachim 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 Air Transport with a short position of Menora Mivtachim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Menora Mivtachim.

Diversification Opportunities for Air Transport and Menora Mivtachim

0.32

Correlation Coefficient

Air Transport  Menora Mivtachim

Weak diversification

The 3 months correlation between Air and Menora is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Menora Mivtachim Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Menora Mivtachim Holdings and Air Transport 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 Air Transport Services are associated (or correlated) with Menora Mivtachim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Menora Mivtachim Holdings has no effect on the direction of Air Transport i.e., Air Transport and Menora Mivtachim go up and down completely randomly.

Pair Corralation between Air Transport and Menora Mivtachim

Given the investment horizon of 90 days Air Transport Services is expected to generate 3.45 times more return on investment than Menora Mivtachim. However, Air Transport is 3.45 times more volatile than Menora Mivtachim Holdings. It trades about 0.16 of its potential returns per unit of risk. Menora Mivtachim Holdings is currently generating about 0.13 per unit of risk. If you would invest  1,625  in Air Transport Services on October 23, 2024 and sell it today you would earn a total of  586.00  from holding Air Transport Services or generate 36.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Air Transport Services  vs.  Menora Mivtachim Holdings

Air Transport Services

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Air Transport reported solid returns over the last few months and may actually be approaching a breakup point.

Menora Mivtachim Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Menora Mivtachim Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical indicators, Menora Mivtachim may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Air Transport and Menora Mivtachim

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

The idea behind Air Transport Services and Menora Mivtachim Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.