Correlation Between Mizrahi Tefahot and Spring Ventures

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

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

Diversification Opportunities for Mizrahi Tefahot and Spring Ventures

0.09

Correlation Coefficient

Mizrahi Tefahot  Spring Ventures

Significant diversification

The 3 months correlation between Mizrahi and Spring is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Mizrahi Tefahot and Spring Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Ventures 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 Spring Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spring Ventures has no effect on the direction of Mizrahi Tefahot i.e., Mizrahi Tefahot and Spring Ventures go up and down completely randomly.

Pair Corralation between Mizrahi Tefahot and Spring Ventures

Assuming the 90 days trading horizon Mizrahi Tefahot is expected to generate 1.14 times more return on investment than Spring Ventures. However, Mizrahi Tefahot is 1.14 times more volatile than Spring Ventures. It trades about 0.12 of its potential returns per unit of risk. Spring Ventures is currently generating about 0.02 per unit of risk. If you would invest  1,549,517  in Mizrahi Tefahot on December 30, 2024 and sell it today you would earn a total of  129,483  from holding Mizrahi Tefahot or generate 8.36% return on investment over 90 days.

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

Mizrahi Tefahot  vs.  Spring Ventures

Mizrahi Tefahot

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mizrahi Tefahot are ranked lower than 9 (%) 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.

Spring Ventures

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spring Ventures are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Spring Ventures is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mizrahi Tefahot and Spring Ventures

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

The idea behind Mizrahi Tefahot and Spring Ventures 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..