Correlation Between Bezeq Israeli and Oil Refineries

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

Diversification Opportunities for Bezeq Israeli and Oil Refineries

0.52

Correlation Coefficient

Bezeq Israeli  Oil Refineries

Very weak diversification

The 3 months correlation between Bezeq and Oil is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Oil Refineries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Refineries 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 Oil Refineries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Refineries has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Oil Refineries go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Oil Refineries

Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to generate 0.66 times more return on investment than Oil Refineries. However, Bezeq Israeli Telecommunication is 1.51 times less risky than Oil Refineries. It trades about 0.31 of its potential returns per unit of risk. Oil Refineries is currently generating about 0.08 per unit of risk. If you would invest  45,900  in Bezeq Israeli Telecommunication on October 26, 2024 and sell it today you would earn a total of  11,970  from holding Bezeq Israeli Telecommunication or generate 26.08% return on investment over 90 days.

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

Bezeq Israeli Telecommunicatio  vs.  Oil Refineries

Bezeq Israeli Teleco

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bezeq Israeli Telecommunication are ranked lower than 24 (%) 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.

Oil Refineries

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Bezeq Israeli and Oil Refineries

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

The idea behind Bezeq Israeli Telecommunication and Oil Refineries 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.