Correlation Between Mizrahi Tefahot and Isracard

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

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

Diversification Opportunities for Mizrahi Tefahot and Isracard

0.13

Correlation Coefficient

Mizrahi Tefahot  Isracard

Average diversification

The 3 months correlation between Mizrahi and Isracard is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Mizrahi Tefahot and Isracard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isracard 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 Isracard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isracard has no effect on the direction of Mizrahi Tefahot i.e., Mizrahi Tefahot and Isracard go up and down completely randomly.

Pair Corralation between Mizrahi Tefahot and Isracard

Assuming the 90 days trading horizon Mizrahi Tefahot is expected to generate 1.06 times more return on investment than Isracard. However, Mizrahi Tefahot is 1.06 times more volatile than Isracard. It trades about 0.22 of its potential returns per unit of risk. Isracard is currently generating about 0.13 per unit of risk. If you would invest  1,373,037  in Mizrahi Tefahot on September 4, 2024 and sell it today you would earn a total of  211,963  from holding Mizrahi Tefahot or generate 15.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.83%
Values	Daily Returns

Mizrahi Tefahot  vs.  Isracard

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.

Isracard

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Isracard are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Isracard may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mizrahi Tefahot and Isracard

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

The idea behind Mizrahi Tefahot and Isracard 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.