Correlation Between MEITAV INVESTMENTS and Discount Investment

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

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

Diversification Opportunities for MEITAV INVESTMENTS and Discount Investment

-0.68

Correlation Coefficient

MEITAV INVESTMENTS  Discount Investment

Excellent diversification

The 3 months correlation between MEITAV and Discount is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding MEITAV INVESTMENTS HOUSE and Discount Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discount Investment Corp and MEITAV INVESTMENTS 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 MEITAV INVESTMENTS HOUSE are associated (or correlated) with Discount Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discount Investment Corp has no effect on the direction of MEITAV INVESTMENTS i.e., MEITAV INVESTMENTS and Discount Investment go up and down completely randomly.

Pair Corralation between MEITAV INVESTMENTS and Discount Investment

Assuming the 90 days trading horizon MEITAV INVESTMENTS HOUSE is expected to generate 0.7 times more return on investment than Discount Investment. However, MEITAV INVESTMENTS HOUSE is 1.44 times less risky than Discount Investment. It trades about 0.07 of its potential returns per unit of risk. Discount Investment Corp is currently generating about 0.01 per unit of risk. If you would invest  158,456  in MEITAV INVESTMENTS HOUSE on February 5, 2024 and sell it today you would earn a total of  5,744  from holding MEITAV INVESTMENTS HOUSE or generate 3.62% return on investment over 90 days.

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

MEITAV INVESTMENTS HOUSE  vs.  Discount Investment Corp

MEITAV INVESTMENTS HOUSE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MEITAV INVESTMENTS HOUSE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MEITAV INVESTMENTS may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Discount Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Discount Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Discount Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MEITAV INVESTMENTS and Discount Investment

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

The idea behind MEITAV INVESTMENTS HOUSE and Discount Investment Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.