Correlation Between Itay Financial and Meitav Dash

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

Diversification Opportunities for Itay Financial and Meitav Dash

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Itay and Meitav is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Itay Financial AA and Meitav Dash Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meitav Dash Investments and Itay Financial 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 Itay Financial AA are associated (or correlated) with Meitav Dash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meitav Dash Investments has no effect on the direction of Itay Financial i.e., Itay Financial and Meitav Dash go up and down completely randomly.

Pair Corralation between Itay Financial and Meitav Dash

Assuming the 90 days trading horizon Itay Financial AA is expected to generate 23.17 times more return on investment than Meitav Dash. However, Itay Financial is 23.17 times more volatile than Meitav Dash Investments. It trades about 0.04 of its potential returns per unit of risk. Meitav Dash Investments is currently generating about 0.15 per unit of risk. If you would invest  10,600  in Itay Financial AA on October 25, 2024 and sell it today you would earn a total of  32,200  from holding Itay Financial AA or generate 303.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Itay Financial AA  vs.  Meitav Dash Investments

 Performance 
       Timeline  
Itay Financial AA 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Itay Financial AA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Itay Financial sustained solid returns over the last few months and may actually be approaching a breakup point.
Meitav Dash Investments 

Risk-Adjusted Performance

44 of 100

 
Weak
 
Strong
Excellent
Compared to the overall equity markets, risk-adjusted returns on investments in Meitav Dash Investments are ranked lower than 44 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Meitav Dash sustained solid returns over the last few months and may actually be approaching a breakup point.

Itay Financial and Meitav Dash Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Itay Financial and Meitav Dash

The main advantage of trading using opposite Itay Financial and Meitav Dash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itay Financial position performs unexpectedly, Meitav Dash 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 Dash will offset losses from the drop in Meitav Dash's long position.
The idea behind Itay Financial AA and Meitav Dash Investments 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.
Check out your portfolio center.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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