Correlation Between Opal Balance and MEITAV INVESTMENTS

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

By analyzing existing cross correlation between Opal Balance and MEITAV INVESTMENTS HOUSE, you can compare the effects of market volatilities on Opal Balance and MEITAV 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 Opal Balance with a short position of MEITAV INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Opal Balance and MEITAV INVESTMENTS.

Diversification Opportunities for Opal Balance and MEITAV INVESTMENTS

0.77

Correlation Coefficient

Opal Balance  MEITAV INVESTMENTS

Poor diversification

The 3 months correlation between Opal and MEITAV is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Opal Balance and MEITAV INVESTMENTS HOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEITAV INVESTMENTS HOUSE and Opal Balance 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 Opal Balance are associated (or correlated) with MEITAV INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEITAV INVESTMENTS HOUSE has no effect on the direction of Opal Balance i.e., Opal Balance and MEITAV INVESTMENTS go up and down completely randomly.

Pair Corralation between Opal Balance and MEITAV INVESTMENTS

Assuming the 90 days trading horizon Opal Balance is expected to generate 4.43 times less return on investment than MEITAV INVESTMENTS. But when comparing it to its historical volatility, Opal Balance is 1.18 times less risky than MEITAV INVESTMENTS. It trades about 0.09 of its potential returns per unit of risk. MEITAV INVESTMENTS HOUSE is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  291,339  in MEITAV INVESTMENTS HOUSE on December 29, 2024 and sell it today you would earn a total of  149,661  from holding MEITAV INVESTMENTS HOUSE or generate 51.37% return on investment over 90 days.

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

Opal Balance  vs.  MEITAV INVESTMENTS HOUSE

Opal Balance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Opal Balance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Opal Balance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

MEITAV INVESTMENTS HOUSE

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in MEITAV INVESTMENTS HOUSE are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MEITAV INVESTMENTS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Opal Balance and MEITAV INVESTMENTS

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

The idea behind Opal Balance and MEITAV INVESTMENTS HOUSE 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.