Correlation Between Azrieli and Clal Insurance
Can any of the company-specific risk be diversified away by investing in both Azrieli and Clal 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 Azrieli and Clal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azrieli Group and Clal Insurance Enterprises, you can compare the effects of market volatilities on Azrieli and Clal 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 Azrieli with a short position of Clal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azrieli and Clal Insurance.
Diversification Opportunities for Azrieli and Clal Insurance
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Azrieli and Clal is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Azrieli Group and Clal Insurance Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Insurance Enter and Azrieli 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 Azrieli Group are associated (or correlated) with Clal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Insurance Enter has no effect on the direction of Azrieli i.e., Azrieli and Clal Insurance go up and down completely randomly.
Pair Corralation between Azrieli and Clal Insurance
Assuming the 90 days trading horizon Azrieli is expected to generate 1.66 times less return on investment than Clal Insurance. But when comparing it to its historical volatility, Azrieli Group is 1.16 times less risky than Clal Insurance. It trades about 0.25 of its potential returns per unit of risk. Clal Insurance Enterprises is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 672,000 in Clal Insurance Enterprises on August 30, 2024 and sell it today you would earn a total of 88,000 from holding Clal Insurance Enterprises or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Azrieli Group vs. Clal Insurance Enterprises
Performance |
| Timeline |
| Azrieli Group |
| Clal Insurance Enter |
Azrieli and Clal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Azrieli and Clal Insurance
The main advantage of trading using opposite Azrieli and Clal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azrieli position performs unexpectedly, Clal 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 Clal Insurance will offset losses from the drop in Clal Insurance's long position.| Azrieli vs. Melisron | Azrieli vs. Bank Leumi Le Israel | Azrieli vs. Bank Hapoalim | Azrieli vs. Amot Investments |
| Clal Insurance vs. Elbit Systems | Clal Insurance vs. Discount Investment Corp | Clal Insurance vs. AudioCodes | Clal Insurance vs. Shufersal |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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