Correlation Between Clal Insurance and Afi Properties
Can any of the company-specific risk be diversified away by investing in both Clal Insurance and Afi Properties 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 Clal Insurance and Afi Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clal Insurance Enterprises and Afi Properties, you can compare the effects of market volatilities on Clal Insurance and Afi Properties 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 Clal Insurance with a short position of Afi Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and Afi Properties.
Diversification Opportunities for Clal Insurance and Afi Properties
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clal and Afi is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and Afi Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afi Properties and Clal Insurance 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 Clal Insurance Enterprises are associated (or correlated) with Afi Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afi Properties has no effect on the direction of Clal Insurance i.e., Clal Insurance and Afi Properties go up and down completely randomly.
Pair Corralation between Clal Insurance and Afi Properties
Assuming the 90 days trading horizon Clal Insurance is expected to generate 1.52 times less return on investment than Afi Properties. But when comparing it to its historical volatility, Clal Insurance Enterprises is 1.06 times less risky than Afi Properties. It trades about 0.06 of its potential returns per unit of risk. Afi Properties is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,046,000 in Afi Properties on September 2, 2024 and sell it today you would earn a total of 659,000 from holding Afi Properties or generate 63.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clal Insurance Enterprises vs. Afi Properties
Performance |
| Timeline |
| Clal Insurance Enter |
| Afi Properties |
Clal Insurance and Afi Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clal Insurance and Afi Properties
The main advantage of trading using opposite Clal Insurance and Afi Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Insurance position performs unexpectedly, Afi Properties 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 Afi Properties will offset losses from the drop in Afi Properties' long position.| Clal Insurance vs. Migdal Insurance | Clal Insurance vs. Harel Insurance Investments | Clal Insurance vs. Israel Discount Bank | Clal Insurance vs. Bank Hapoalim |
| Afi Properties vs. Alony Hetz Properties | Afi Properties vs. Clal Insurance Enterprises | Afi Properties vs. Electra | Afi Properties vs. Harel Insurance Investments |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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