Correlation Between Mizrahi Tefahot and Shikun Binui

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

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

Diversification Opportunities for Mizrahi Tefahot and Shikun Binui

-0.65

Correlation Coefficient

Mizrahi Tefahot  Shikun Binui

Excellent diversification

The 3 months correlation between Mizrahi and Shikun is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mizrahi Tefahot and Shikun Binui in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shikun Binui 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 Shikun Binui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shikun Binui has no effect on the direction of Mizrahi Tefahot i.e., Mizrahi Tefahot and Shikun Binui go up and down completely randomly.

Pair Corralation between Mizrahi Tefahot and Shikun Binui

Assuming the 90 days trading horizon Mizrahi Tefahot is expected to generate 0.43 times more return on investment than Shikun Binui. However, Mizrahi Tefahot is 2.32 times less risky than Shikun Binui. It trades about 0.11 of its potential returns per unit of risk. Shikun Binui is currently generating about -0.06 per unit of risk. If you would invest  1,585,000  in Mizrahi Tefahot on December 1, 2024 and sell it today you would earn a total of  107,000  from holding Mizrahi Tefahot or generate 6.75% return on investment over 90 days.

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

Mizrahi Tefahot  vs.  Shikun Binui

Mizrahi Tefahot

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mizrahi Tefahot are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mizrahi Tefahot may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Shikun Binui

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shikun Binui has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Mizrahi Tefahot and Shikun Binui

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

The idea behind Mizrahi Tefahot and Shikun Binui 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.