Correlation Between Clal Insurance and Bank Hapoalim
Can any of the company-specific risk be diversified away by investing in both Clal Insurance and Bank Hapoalim 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 Bank Hapoalim 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 Bank Hapoalim, you can compare the effects of market volatilities on Clal Insurance and Bank Hapoalim 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 Bank Hapoalim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and Bank Hapoalim.
Diversification Opportunities for Clal Insurance and Bank Hapoalim
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Clal and Bank is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and Bank Hapoalim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Hapoalim 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 Bank Hapoalim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Hapoalim has no effect on the direction of Clal Insurance i.e., Clal Insurance and Bank Hapoalim go up and down completely randomly.
Pair Corralation between Clal Insurance and Bank Hapoalim
Assuming the 90 days trading horizon Clal Insurance Enterprises is expected to generate 1.31 times more return on investment than Bank Hapoalim. However, Clal Insurance is 1.31 times more volatile than Bank Hapoalim. It trades about 0.31 of its potential returns per unit of risk. Bank Hapoalim is currently generating about 0.39 per unit of risk. If you would invest 704,400 in Clal Insurance Enterprises on August 31, 2024 and sell it today you would earn a total of 66,800 from holding Clal Insurance Enterprises or generate 9.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clal Insurance Enterprises vs. Bank Hapoalim
Performance |
| Timeline |
| Clal Insurance Enter |
| Bank Hapoalim |
Clal Insurance and Bank Hapoalim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clal Insurance and Bank Hapoalim
The main advantage of trading using opposite Clal Insurance and Bank Hapoalim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Insurance position performs unexpectedly, Bank Hapoalim 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 Bank Hapoalim will offset losses from the drop in Bank Hapoalim'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 |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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