Correlation Between Bezeq Israeli and Enlight Renewable

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

Diversification Opportunities for Bezeq Israeli and Enlight Renewable

BezeqEnlightDiversified AwayBezeqEnlightDiversified Away100%
-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between Bezeq and Enlight is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Enlight Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlight Renewable Energy 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 Enlight Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlight Renewable Energy has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Enlight Renewable go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Enlight Renewable

Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to generate 0.81 times more return on investment than Enlight Renewable. However, Bezeq Israeli Telecommunication is 1.23 times less risky than Enlight Renewable. It trades about 0.37 of its potential returns per unit of risk. Enlight Renewable Energy is currently generating about -0.01 per unit of risk. If you would invest  40,399  in Bezeq Israeli Telecommunication on September 16, 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 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Bezeq Israeli Telecommunicatio  vs.  Enlight Renewable Energy

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 0102030
JavaScript chart by amCharts 3.21.15BEZQ ENLT
       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
Enlight Renewable Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Enlight Renewable Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Enlight Renewable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15SepOctNovDecOctNovDec5,6005,7005,8005,9006,0006,1006,2006,300

Bezeq Israeli and Enlight Renewable Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.84-3.62-2.41-1.19-0.02021.332.74.085.456.82 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15BEZQ ENLT
       Returns  

Pair Trading with Bezeq Israeli and Enlight Renewable

The main advantage of trading using opposite Bezeq Israeli and Enlight Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bezeq Israeli position performs unexpectedly, Enlight Renewable 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 Enlight Renewable will offset losses from the drop in Enlight Renewable's long position.
The idea behind Bezeq Israeli Telecommunication and Enlight Renewable Energy 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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