Correlation Between Meitav Dash and GODM Investments

Can any of the company-specific risk be diversified away by investing in both Meitav Dash and GODM 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 Meitav Dash and GODM Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Meitav Dash Investments and GODM Investments, you can compare the effects of market volatilities on Meitav Dash and GODM 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 Meitav Dash with a short position of GODM Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meitav Dash and GODM Investments.

Diversification Opportunities for Meitav Dash and GODM Investments

0.93

Correlation Coefficient

Meitav Dash  GODM Investments

Almost no diversification

The 3 months correlation between Meitav and GODM is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Meitav Dash Investments and GODM Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GODM Investments and Meitav Dash 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 Meitav Dash Investments are associated (or correlated) with GODM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GODM Investments has no effect on the direction of Meitav Dash i.e., Meitav Dash and GODM Investments go up and down completely randomly.

Pair Corralation between Meitav Dash and GODM Investments

Assuming the 90 days trading horizon Meitav Dash is expected to generate 3.4 times less return on investment than GODM Investments. But when comparing it to its historical volatility, Meitav Dash Investments is 5.32 times less risky than GODM Investments. It trades about 0.33 of its potential returns per unit of risk. GODM Investments is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,900  in GODM Investments on December 30, 2024 and sell it today you would earn a total of  5,410  from holding GODM Investments or generate 186.55% return on investment over 90 days.

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

Meitav Dash Investments  vs.  GODM Investments

Meitav Dash Investments

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Meitav Dash Investments are ranked lower than 25 (%) 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.

GODM Investments

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GODM Investments are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GODM Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Meitav Dash and GODM Investments

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

The idea behind Meitav Dash Investments and GODM 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.