Correlation Between Clal Insurance and Elbit Imaging
Can any of the company-specific risk be diversified away by investing in both Clal Insurance and Elbit Imaging 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 Elbit Imaging 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 Elbit Imaging, you can compare the effects of market volatilities on Clal Insurance and Elbit Imaging 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 Elbit Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and Elbit Imaging.
Diversification Opportunities for Clal Insurance and Elbit Imaging
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Clal and Elbit is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and Elbit Imaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Imaging 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 Elbit Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Imaging has no effect on the direction of Clal Insurance i.e., Clal Insurance and Elbit Imaging go up and down completely randomly.
Pair Corralation between Clal Insurance and Elbit Imaging
Assuming the 90 days trading horizon Clal Insurance Enterprises is expected to under-perform the Elbit Imaging. But the stock apears to be less risky and, when comparing its historical volatility, Clal Insurance Enterprises is 2.32 times less risky than Elbit Imaging. The stock trades about -0.12 of its potential returns per unit of risk. The Elbit Imaging is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 70,000 in Elbit Imaging on December 8, 2024 and sell it today you would earn a total of 5,500 from holding Elbit Imaging or generate 7.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clal Insurance Enterprises vs. Elbit Imaging
Performance |
| Timeline |
| Clal Insurance Enter |
| Elbit Imaging |
Clal Insurance and Elbit Imaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clal Insurance and Elbit Imaging
The main advantage of trading using opposite Clal Insurance and Elbit Imaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Insurance position performs unexpectedly, Elbit Imaging 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 Elbit Imaging will offset losses from the drop in Elbit Imaging's long position.| Clal Insurance vs. Migdal Insurance | ||
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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