Correlation Between Clal Insurance and Fridenson
Can any of the company-specific risk be diversified away by investing in both Clal Insurance and Fridenson 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 Fridenson 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 Fridenson, you can compare the effects of market volatilities on Clal Insurance and Fridenson 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 Fridenson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and Fridenson.
Diversification Opportunities for Clal Insurance and Fridenson
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Clal and Fridenson is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and Fridenson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fridenson 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 Fridenson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fridenson has no effect on the direction of Clal Insurance i.e., Clal Insurance and Fridenson go up and down completely randomly.
Pair Corralation between Clal Insurance and Fridenson
Assuming the 90 days trading horizon Clal Insurance Enterprises is expected to generate 0.57 times more return on investment than Fridenson. However, Clal Insurance Enterprises is 1.76 times less risky than Fridenson. It trades about 0.14 of its potential returns per unit of risk. Fridenson is currently generating about 0.01 per unit of risk. If you would invest 576,247 in Clal Insurance Enterprises on November 2, 2024 and sell it today you would earn a total of 360,753 from holding Clal Insurance Enterprises or generate 62.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clal Insurance Enterprises vs. Fridenson
Performance |
| Timeline |
| Clal Insurance Enter |
| Fridenson |
Clal Insurance and Fridenson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clal Insurance and Fridenson
The main advantage of trading using opposite Clal Insurance and Fridenson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Insurance position performs unexpectedly, Fridenson 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 Fridenson will offset losses from the drop in Fridenson's long position.| Clal Insurance vs. Migdal Insurance | Clal Insurance vs. Harel Insurance Investments | Clal Insurance vs. Israel Discount Bank | Clal Insurance vs. Bank Hapoalim |
| Fridenson vs. Brimag L | Fridenson vs. Allot Communications | Fridenson vs. Hamat Group | Fridenson vs. Elron Electronic Industries |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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