Correlation Between Clal Insurance and GODM Investments
Can any of the company-specific risk be diversified away by investing in both Clal Insurance and GODM Investments 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 GODM Investments 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 GODM Investments, you can compare the effects of market volatilities on Clal Insurance and GODM Investments 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 GODM Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and GODM Investments.
Diversification Opportunities for Clal Insurance and GODM Investments
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Clal and GODM is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and GODM Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GODM Investments 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 GODM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GODM Investments has no effect on the direction of Clal Insurance i.e., Clal Insurance and GODM Investments go up and down completely randomly.
Pair Corralation between Clal Insurance and GODM Investments
Assuming the 90 days trading horizon Clal Insurance is expected to generate 7.32 times less return on investment than GODM Investments. But when comparing it to its historical volatility, Clal Insurance Enterprises is 10.22 times less risky than GODM Investments. It trades about 0.33 of its potential returns per unit of risk. GODM Investments is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 5,780 in GODM Investments on November 27, 2024 and sell it today you would earn a total of 3,710 from holding GODM Investments or generate 64.19% 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. GODM Investments
Performance |
| Timeline |
| Clal Insurance Enter |
| GODM Investments |
Clal Insurance and GODM Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clal Insurance and GODM Investments
The main advantage of trading using opposite Clal Insurance and GODM Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Insurance position performs unexpectedly, GODM Investments 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 GODM Investments will offset losses from the drop in GODM Investments' long position.| Clal Insurance vs. Migdal Insurance | Clal Insurance vs. Harel Insurance Investments | Clal Insurance vs. Israel Discount Bank | Clal Insurance vs. Bank Hapoalim |
| GODM Investments vs. Ram On Investments and | GODM Investments vs. G Willi Food International | GODM Investments vs. YD More Investments | GODM Investments vs. Adgar Investments and |
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 CEOs Directory module to screen CEOs from public companies around the world.
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