Correlation Between Discount Investment and MEITAV INVESTMENTS

Can any of the company-specific risk be diversified away by investing in both Discount Investment and MEITAV INVESTMENTS 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 Discount Investment and MEITAV INVESTMENTS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Discount Investment Corp and MEITAV INVESTMENTS HOUSE, you can compare the effects of market volatilities on Discount Investment and MEITAV INVESTMENTS 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 Discount Investment with a short position of MEITAV INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discount Investment and MEITAV INVESTMENTS.

Diversification Opportunities for Discount Investment and MEITAV INVESTMENTS

0.8

Correlation Coefficient

Discount Investment  MEITAV INVESTMENTS

Very poor diversification

The 3 months correlation between Discount and MEITAV is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Discount Investment Corp and MEITAV INVESTMENTS HOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEITAV INVESTMENTS HOUSE and Discount Investment 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 Discount Investment Corp are associated (or correlated) with MEITAV INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEITAV INVESTMENTS HOUSE has no effect on the direction of Discount Investment i.e., Discount Investment and MEITAV INVESTMENTS go up and down completely randomly.

Pair Corralation between Discount Investment and MEITAV INVESTMENTS

Assuming the 90 days trading horizon Discount Investment Corp is expected to under-perform the MEITAV INVESTMENTS. But the stock apears to be less risky and, when comparing its historical volatility, Discount Investment Corp is 3.41 times less risky than MEITAV INVESTMENTS. The stock trades about -0.5 of its potential returns per unit of risk. The MEITAV INVESTMENTS HOUSE is currently generating about 0.69 of returns per unit of risk over similar time horizon. If you would invest  200,223  in MEITAV INVESTMENTS HOUSE on September 12, 2024 and sell it today you would earn a total of  89,677  from holding MEITAV INVESTMENTS HOUSE or generate 44.79% return on investment over 90 days.

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

Discount Investment Corp  vs.  MEITAV INVESTMENTS HOUSE

Discount Investment Corp

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Discount Investment Corp are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Discount Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

MEITAV INVESTMENTS HOUSE

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in MEITAV INVESTMENTS HOUSE are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MEITAV INVESTMENTS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Discount Investment and MEITAV INVESTMENTS

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

The idea behind Discount Investment Corp and MEITAV INVESTMENTS HOUSE 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..