Correlation Between Bezeq Israeli and Dan Hotels

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

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

Diversification Opportunities for Bezeq Israeli and Dan Hotels

0.62

Correlation Coefficient

Bezeq Israeli  Dan Hotels

Poor diversification

The 3 months correlation between Bezeq and Dan is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Dan Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dan Hotels and Bezeq Israeli 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 Bezeq Israeli Telecommunication are associated (or correlated) with Dan Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dan Hotels has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Dan Hotels go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Dan Hotels

Assuming the 90 days trading horizon Bezeq Israeli is expected to generate 1.03 times less return on investment than Dan Hotels. In addition to that, Bezeq Israeli is 1.05 times more volatile than Dan Hotels. It trades about 0.07 of its total potential returns per unit of risk. Dan Hotels is currently generating about 0.08 per unit of volatility. If you would invest  221,800  in Dan Hotels on December 29, 2024 and sell it today you would earn a total of  14,100  from holding Dan Hotels or generate 6.36% return on investment over 90 days.

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

Bezeq Israeli Telecommunicatio  vs.  Dan Hotels

Bezeq Israeli Teleco

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bezeq Israeli Telecommunication are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bezeq Israeli may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Dan Hotels

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dan Hotels are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dan Hotels may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bezeq Israeli and Dan Hotels

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

The idea behind Bezeq Israeli Telecommunication and Dan Hotels 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.