Correlation Between Azrieli and Israel Land

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

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

Diversification Opportunities for Azrieli and Israel Land

-0.14

Correlation Coefficient

Azrieli  Israel Land

Good diversification

The 3 months correlation between Azrieli and Israel is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Azrieli Group and Israel Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Land Development and Azrieli 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 Azrieli Group are associated (or correlated) with Israel Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Land Development has no effect on the direction of Azrieli i.e., Azrieli and Israel Land go up and down completely randomly.

Pair Corralation between Azrieli and Israel Land

Assuming the 90 days trading horizon Azrieli is expected to generate 1.48 times less return on investment than Israel Land. In addition to that, Azrieli is 1.04 times more volatile than Israel Land Development. It trades about 0.16 of its total potential returns per unit of risk. Israel Land Development is currently generating about 0.25 per unit of volatility. If you would invest  307,900  in Israel Land Development on September 11, 2024 and sell it today you would earn a total of  76,600  from holding Israel Land Development or generate 24.88% return on investment over 90 days.

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

Azrieli Group  vs.  Israel Land Development

Azrieli Group

Risk-Adjusted Performance

12 of 100

Good

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

Israel Land Development

Risk-Adjusted Performance

19 of 100

Solid

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

Pair Trading with Azrieli and Israel Land

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

The idea behind Azrieli Group and Israel Land Development 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.