Correlation Between Mizrahi Tefahot and Computer Direct

Can any of the company-specific risk be diversified away by investing in both Mizrahi Tefahot and Computer Direct 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 Mizrahi Tefahot and Computer Direct into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Mizrahi Tefahot and Computer Direct

-0.02

Correlation Coefficient

Mizrahi Tefahot  Computer Direct

Good diversification

The 3 months correlation between Mizrahi and Computer is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mizrahi Tefahot and Computer Direct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Direct and Mizrahi Tefahot 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 Mizrahi Tefahot are associated (or correlated) with Computer Direct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Direct has no effect on the direction of Mizrahi Tefahot i.e., Mizrahi Tefahot and Computer Direct go up and down completely randomly.

Pair Corralation between Mizrahi Tefahot and Computer Direct

Assuming the 90 days trading horizon Mizrahi Tefahot is expected to generate 2.42 times less return on investment than Computer Direct. But when comparing it to its historical volatility, Mizrahi Tefahot is 1.29 times less risky than Computer Direct. It trades about 0.22 of its potential returns per unit of risk. Computer Direct is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  2,586,000  in Computer Direct on September 4, 2024 and sell it today you would earn a total of  1,084,000  from holding Computer Direct or generate 41.92% return on investment over 90 days.

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

Mizrahi Tefahot  vs.  Computer Direct

Mizrahi Tefahot

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mizrahi Tefahot are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mizrahi Tefahot sustained solid returns over the last few months and may actually be approaching a breakup point.

Computer Direct

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Direct are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Computer Direct sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mizrahi Tefahot and Computer Direct

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

The idea behind Mizrahi Tefahot and Computer Direct 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.