Correlation Between Clal Insurance and Knafaim
Can any of the company-specific risk be diversified away by investing in both Clal Insurance and Knafaim 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 Knafaim 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 Knafaim, you can compare the effects of market volatilities on Clal Insurance and Knafaim 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 Knafaim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and Knafaim.
Diversification Opportunities for Clal Insurance and Knafaim
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Clal and Knafaim is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and Knafaim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knafaim 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 Knafaim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knafaim has no effect on the direction of Clal Insurance i.e., Clal Insurance and Knafaim go up and down completely randomly.
Pair Corralation between Clal Insurance and Knafaim
Assuming the 90 days trading horizon Clal Insurance is expected to generate 1.94 times less return on investment than Knafaim. But when comparing it to its historical volatility, Clal Insurance Enterprises is 1.26 times less risky than Knafaim. It trades about 0.07 of its potential returns per unit of risk. Knafaim is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 88,656 in Knafaim on August 25, 2024 and sell it today you would earn a total of 43,844 from holding Knafaim or generate 49.45% 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. Knafaim
Performance |
| Timeline |
| Clal Insurance Enter |
| Knafaim |
Clal Insurance and Knafaim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clal Insurance and Knafaim
The main advantage of trading using opposite Clal Insurance and Knafaim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Insurance position performs unexpectedly, Knafaim 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 Knafaim will offset losses from the drop in Knafaim'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 |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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