Correlation Between Clal Insurance and First International
Can any of the company-specific risk be diversified away by investing in both Clal Insurance and First International 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 First International 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 First International Bank, you can compare the effects of market volatilities on Clal Insurance and First International 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 First International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and First International.
Diversification Opportunities for Clal Insurance and First International
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Clal and First is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and First International Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First International Bank 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 First International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First International Bank has no effect on the direction of Clal Insurance i.e., Clal Insurance and First International go up and down completely randomly.
Pair Corralation between Clal Insurance and First International
Assuming the 90 days trading horizon Clal Insurance Enterprises is expected to generate 1.94 times more return on investment than First International. However, Clal Insurance is 1.94 times more volatile than First International Bank. It trades about 0.46 of its potential returns per unit of risk. First International Bank is currently generating about 0.46 per unit of risk. If you would invest 648,500 in Clal Insurance Enterprises on August 29, 2024 and sell it today you would earn a total of 118,400 from holding Clal Insurance Enterprises or generate 18.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clal Insurance Enterprises vs. First International Bank
Performance |
| Timeline |
| Clal Insurance Enter |
| First International Bank |
Clal Insurance and First International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clal Insurance and First International
The main advantage of trading using opposite Clal Insurance and First International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Insurance position performs unexpectedly, First International 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 First International will offset losses from the drop in First International's long position.| Clal Insurance vs. Elbit Systems | Clal Insurance vs. Discount Investment Corp | Clal Insurance vs. AudioCodes | Clal Insurance vs. Shufersal |
| First International vs. Elbit Systems | First International vs. Discount Investment Corp | First International vs. Clal Insurance Enterprises | First International vs. AudioCodes |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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