Correlation Between Itay Financial and Mivne Real

Can any of the company-specific risk be diversified away by investing in both Itay Financial and Mivne 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 Itay Financial and Mivne Real 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 Mivne Real Estate, you can compare the effects of market volatilities on Itay Financial and Mivne 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 Itay Financial with a short position of Mivne Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itay Financial and Mivne Real.

Diversification Opportunities for Itay Financial and Mivne Real

-0.42

Correlation Coefficient

Itay Financial  Mivne Real

Very good diversification

The 3 months correlation between Itay and Mivne is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Itay Financial AA and Mivne Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mivne Real Estate 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 Mivne Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mivne Real Estate has no effect on the direction of Itay Financial i.e., Itay Financial and Mivne Real go up and down completely randomly.

Pair Corralation between Itay Financial and Mivne Real

Assuming the 90 days trading horizon Itay Financial AA is expected to generate 11.97 times more return on investment than Mivne Real. However, Itay Financial is 11.97 times more volatile than Mivne Real Estate. It trades about 0.18 of its potential returns per unit of risk. Mivne Real Estate is currently generating about -0.01 per unit of risk. If you would invest  35,950  in Itay Financial AA on December 2, 2024 and sell it today you would earn a total of  32,280  from holding Itay Financial AA or generate 89.79% return on investment over 90 days.

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

Itay Financial AA  vs.  Mivne Real Estate

Itay Financial AA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Itay Financial AA are ranked lower than 12 (%) 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.

Mivne Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mivne Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mivne Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Itay Financial and Mivne Real

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

The idea behind Itay Financial AA and Mivne 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.