Correlation Between Azrieli and Migdal Insurance
Can any of the company-specific risk be diversified away by investing in both Azrieli 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 Azrieli and Migdal 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 Migdal Insurance, you can compare the effects of market volatilities on Azrieli 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 Azrieli with a short position of Migdal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azrieli and Migdal Insurance.
Diversification Opportunities for Azrieli and Migdal Insurance
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Azrieli and Migdal is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Azrieli Group and Migdal Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Migdal Insurance 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 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 Azrieli i.e., Azrieli and Migdal Insurance go up and down completely randomly.
Pair Corralation between Azrieli and Migdal Insurance
Assuming the 90 days trading horizon Azrieli Group is expected to under-perform the Migdal Insurance. In addition to that, Azrieli is 1.92 times more volatile than Migdal Insurance. It trades about -0.21 of its total potential returns per unit of risk. Migdal Insurance is currently generating about -0.11 per unit of volatility. If you would invest 77,350 in Migdal Insurance on December 8, 2024 and sell it today you would lose (2,050) from holding Migdal Insurance or give up 2.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Azrieli Group vs. Migdal Insurance
Performance |
| Timeline |
| Azrieli Group |
| Migdal Insurance |
Azrieli and Migdal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Azrieli and Migdal Insurance
The main advantage of trading using opposite Azrieli and Migdal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azrieli 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.| Azrieli vs. Melisron | ||
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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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