Correlation Between Bezeq Israeli and Blue Square

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

By analyzing existing cross correlation between Bezeq Israeli Telecommunication and Blue Square Real, you can compare the effects of market volatilities on Bezeq Israeli and Blue Square 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 Bezeq Israeli with a short position of Blue Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bezeq Israeli and Blue Square.

Diversification Opportunities for Bezeq Israeli and Blue Square

-0.59

Correlation Coefficient

Bezeq Israeli  Blue Square

Excellent diversification

The 3 months correlation between Bezeq and Blue is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Blue Square Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Square Real and Bezeq Israeli 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 Bezeq Israeli Telecommunication are associated (or correlated) with Blue Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Square Real has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Blue Square go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Blue Square

Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to under-perform the Blue Square. But the stock apears to be less risky and, when comparing its historical volatility, Bezeq Israeli Telecommunication is 1.79 times less risky than Blue Square. The stock trades about -0.04 of its potential returns per unit of risk. The Blue Square Real is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,593,268  in Blue Square Real on February 2, 2024 and sell it today you would earn a total of  243,732  from holding Blue Square Real or generate 9.4% return on investment over 90 days.

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

Bezeq Israeli Telecommunicatio  vs.  Blue Square Real

Bezeq Israeli Teleco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bezeq Israeli Telecommunication 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.

Blue Square Real

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Blue Square Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Blue Square sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bezeq Israeli and Blue Square

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

The idea behind Bezeq Israeli Telecommunication and Blue Square Real 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 Stocks Directory module to find actively traded stocks across global markets.