Correlation Between Ayalon Holdings and Migdal Insurance
Can any of the company-specific risk be diversified away by investing in both Ayalon Holdings and Migdal Insurance 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 Ayalon Holdings and Migdal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ayalon Holdings and Migdal Insurance, you can compare the effects of market volatilities on Ayalon Holdings and Migdal Insurance 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 Ayalon Holdings with a short position of Migdal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ayalon Holdings and Migdal Insurance.
Diversification Opportunities for Ayalon Holdings and Migdal Insurance
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ayalon and Migdal is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Ayalon Holdings and Migdal Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Migdal Insurance and Ayalon Holdings 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 Ayalon Holdings are associated (or correlated) with Migdal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Migdal Insurance has no effect on the direction of Ayalon Holdings i.e., Ayalon Holdings and Migdal Insurance go up and down completely randomly.
Pair Corralation between Ayalon Holdings and Migdal Insurance
Assuming the 90 days trading horizon Ayalon Holdings is expected to generate 1.12 times more return on investment than Migdal Insurance. However, Ayalon Holdings is 1.12 times more volatile than Migdal Insurance. It trades about 0.1 of its potential returns per unit of risk. Migdal Insurance is currently generating about 0.07 per unit of risk. If you would invest 126,513 in Ayalon Holdings on September 12, 2024 and sell it today you would earn a total of 181,287 from holding Ayalon Holdings or generate 143.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ayalon Holdings vs. Migdal Insurance
Performance |
| Timeline |
| Ayalon Holdings |
| Migdal Insurance |
Ayalon Holdings and Migdal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ayalon Holdings and Migdal Insurance
The main advantage of trading using opposite Ayalon Holdings and Migdal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ayalon Holdings position performs unexpectedly, Migdal Insurance 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 Migdal Insurance will offset losses from the drop in Migdal Insurance's long position.| Ayalon Holdings vs. Clal Insurance Enterprises | Ayalon Holdings vs. Migdal Insurance | Ayalon Holdings vs. Harel Insurance Investments | Ayalon Holdings vs. Menora Miv Hld |
| Migdal Insurance vs. Bank Hapoalim | Migdal Insurance vs. Israel Discount Bank | Migdal Insurance vs. Mizrahi Tefahot | Migdal Insurance vs. Bezeq Israeli Telecommunication |
Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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