Correlation Between Bezeq Israeli and Sella Real

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

Diversification Opportunities for Bezeq Israeli and Sella Real

0.94

Correlation Coefficient

Bezeq Israeli  Sella Real

Almost no diversification

The 3 months correlation between Bezeq and Sella is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Sella Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sella Real Estate 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 Sella Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sella Real Estate has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Sella Real go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Sella Real

Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to generate 0.89 times more return on investment than Sella Real. However, Bezeq Israeli Telecommunication is 1.13 times less risky than Sella Real. It trades about -0.08 of its potential returns per unit of risk. Sella Real Estate is currently generating about -0.11 per unit of risk. If you would invest  53,500  in Bezeq Israeli Telecommunication on October 7, 2024 and sell it today you would lose (720.00) from holding Bezeq Israeli Telecommunication or give up 1.35% of portfolio value over 90 days.

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

Bezeq Israeli Telecommunicatio  vs.  Sella Real Estate

Bezeq Israeli Teleco

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bezeq Israeli Telecommunication are ranked lower than 23 (%) 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.

Sella Real Estate

Risk-Adjusted Performance

37 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sella Real Estate are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Sella Real unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bezeq Israeli and Sella Real

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

The idea behind Bezeq Israeli Telecommunication and Sella Real Estate 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.