Correlation Between Israel Discount and Safe T

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Can any of the company-specific risk be diversified away by investing in both Israel Discount and Safe T 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 Israel Discount and Safe T into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Discount Bank and Safe T Group, you can compare the effects of market volatilities on Israel Discount and Safe T 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 Israel Discount with a short position of Safe T. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Safe T.

Diversification Opportunities for Israel Discount and Safe T

IsraelSafeDiversified AwayIsraelSafeDiversified Away100%
0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Israel and Safe is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and Safe T Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe T Group and Israel Discount 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 Israel Discount Bank are associated (or correlated) with Safe T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe T Group has no effect on the direction of Israel Discount i.e., Israel Discount and Safe T go up and down completely randomly.

Pair Corralation between Israel Discount and Safe T

Assuming the 90 days trading horizon Israel Discount Bank is expected to generate 0.54 times more return on investment than Safe T. However, Israel Discount Bank is 1.85 times less risky than Safe T. It trades about 0.23 of its potential returns per unit of risk. Safe T Group is currently generating about -0.27 per unit of risk. If you would invest  236,704  in Israel Discount Bank on November 21, 2024 and sell it today you would earn a total of  44,596  from holding Israel Discount Bank or generate 18.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.04%
ValuesDaily Returns

Israel Discount Bank  vs.  Safe T Group

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50-40-30-20-10
JavaScript chart by amCharts 3.21.15DSCT SAFE
       Timeline  
Israel Discount Bank 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Israel Discount Bank are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Israel Discount sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2,2002,3002,4002,5002,6002,7002,800
Safe T Group 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Safe T Group 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 basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb300350400450500550

Israel Discount and Safe T Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.64-3.48-2.31-1.150.01941.312.613.925.22 0.050.100.15
JavaScript chart by amCharts 3.21.15DSCT SAFE
       Returns  

Pair Trading with Israel Discount and Safe T

The main advantage of trading using opposite Israel Discount and Safe T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, Safe T 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 Safe T will offset losses from the drop in Safe T's long position.
The idea behind Israel Discount Bank and Safe T Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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