Correlation Between Clal Insurance and Lahav LR
Can any of the company-specific risk be diversified away by investing in both Clal Insurance and Lahav LR 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 Lahav LR 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 Lahav LR Real, you can compare the effects of market volatilities on Clal Insurance and Lahav LR 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 Lahav LR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and Lahav LR.
Diversification Opportunities for Clal Insurance and Lahav LR
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Clal and Lahav is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and Lahav LR Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lahav LR Real 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 Lahav LR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lahav LR Real has no effect on the direction of Clal Insurance i.e., Clal Insurance and Lahav LR go up and down completely randomly.
Pair Corralation between Clal Insurance and Lahav LR
Assuming the 90 days trading horizon Clal Insurance Enterprises is expected to generate 1.01 times more return on investment than Lahav LR. However, Clal Insurance is 1.01 times more volatile than Lahav LR Real. It trades about 0.03 of its potential returns per unit of risk. Lahav LR Real is currently generating about 0.03 per unit of risk. If you would invest 639,000 in Clal Insurance Enterprises on September 3, 2024 and sell it today you would earn a total of 132,200 from holding Clal Insurance Enterprises or generate 20.69% 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. Lahav LR Real
Performance |
| Timeline |
| Clal Insurance Enter |
| Lahav LR Real |
Clal Insurance and Lahav LR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clal Insurance and Lahav LR
The main advantage of trading using opposite Clal Insurance and Lahav LR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Insurance position performs unexpectedly, Lahav LR 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 Lahav LR will offset losses from the drop in Lahav LR's long position.| Clal Insurance vs. Bank Hapoalim | Clal Insurance vs. Israel Discount Bank | Clal Insurance vs. First International Bank | Clal Insurance vs. Elbit Systems |
| Lahav LR vs. Nextage Therapeutics | Lahav LR vs. Israel China Biotechnology | Lahav LR vs. The Gold Bond | Lahav LR vs. Overseas Commerce |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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