Correlation Between Bezeq Israeli and Direct Capital

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Can any of the company-specific risk be diversified away by investing in both Bezeq Israeli and Direct Capital 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 Direct Capital 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 Direct Capital Investments, you can compare the effects of market volatilities on Bezeq Israeli and Direct Capital 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 Direct Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bezeq Israeli and Direct Capital.

Diversification Opportunities for Bezeq Israeli and Direct Capital

BezeqDirectDiversified AwayBezeqDirectDiversified Away100%
-0.88
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Bezeq and Direct is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Direct Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Capital Inves 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 Direct Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Capital Inves has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Direct Capital go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Direct Capital

Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to generate 0.18 times more return on investment than Direct Capital. However, Bezeq Israeli Telecommunication is 5.55 times less risky than Direct Capital. It trades about 0.38 of its potential returns per unit of risk. Direct Capital Investments is currently generating about -0.07 per unit of risk. If you would invest  40,399  in Bezeq Israeli Telecommunication on September 14, 2024 and sell it today you would earn a total of  12,901  from holding Bezeq Israeli Telecommunication or generate 31.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Bezeq Israeli Telecommunicatio  vs.  Direct Capital Investments

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -60-40-20020
JavaScript chart by amCharts 3.21.15BEZQ DCI
       Timeline  
Bezeq Israeli Teleco 

Risk-Adjusted Performance

29 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Bezeq Israeli Telecommunication are ranked lower than 29 (%) 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.
JavaScript chart by amCharts 3.21.15SepOctNovDecOctNovDec400420440460480500520540
Direct Capital Inves 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Direct Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15SepOctNovDecOctNovDec6008001,0001,2001,4001,600

Bezeq Israeli and Direct Capital Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.84-3.62-2.41-1.190.01.352.724.15.47 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15BEZQ DCI
       Returns  

Pair Trading with Bezeq Israeli and Direct Capital

The main advantage of trading using opposite Bezeq Israeli and Direct Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bezeq Israeli position performs unexpectedly, Direct Capital 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 Direct Capital will offset losses from the drop in Direct Capital's long position.
The idea behind Bezeq Israeli Telecommunication and Direct Capital Investments 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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