Correlation Between Clal Insurance and Holmes Place
Can any of the company-specific risk be diversified away by investing in both Clal Insurance and Holmes Place 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 Holmes Place 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 Holmes Place International, you can compare the effects of market volatilities on Clal Insurance and Holmes Place 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 Holmes Place. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and Holmes Place.
Diversification Opportunities for Clal Insurance and Holmes Place
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clal and Holmes is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and Holmes Place International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmes Place Interna 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 Holmes Place. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmes Place Interna has no effect on the direction of Clal Insurance i.e., Clal Insurance and Holmes Place go up and down completely randomly.
Pair Corralation between Clal Insurance and Holmes Place
Assuming the 90 days trading horizon Clal Insurance Enterprises is expected to under-perform the Holmes Place. In addition to that, Clal Insurance is 1.55 times more volatile than Holmes Place International. It trades about -0.26 of its total potential returns per unit of risk. Holmes Place International is currently generating about -0.05 per unit of volatility. If you would invest 66,400 in Holmes Place International on January 13, 2025 and sell it today you would lose (1,520) from holding Holmes Place International or give up 2.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clal Insurance Enterprises vs. Holmes Place International
Performance |
| Timeline |
| Clal Insurance Enter |
| Holmes Place Interna |
Clal Insurance and Holmes Place Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clal Insurance and Holmes Place
The main advantage of trading using opposite Clal Insurance and Holmes Place positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Insurance position performs unexpectedly, Holmes Place 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 Holmes Place will offset losses from the drop in Holmes Place'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 |
| Holmes Place vs. Isracard | Holmes Place vs. Migdal Insurance | Holmes Place vs. Clal Insurance Enterprises | Holmes Place vs. Bank Leumi Le Israel |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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