Correlation Between Clal Insurance and Ravad
Can any of the company-specific risk be diversified away by investing in both Clal Insurance and Ravad 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 Ravad 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 Ravad, you can compare the effects of market volatilities on Clal Insurance and Ravad 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 Ravad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and Ravad.
Diversification Opportunities for Clal Insurance and Ravad
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clal and Ravad is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and Ravad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ravad 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 Ravad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ravad has no effect on the direction of Clal Insurance i.e., Clal Insurance and Ravad go up and down completely randomly.
Pair Corralation between Clal Insurance and Ravad
Assuming the 90 days trading horizon Clal Insurance is expected to generate 1.67 times less return on investment than Ravad. But when comparing it to its historical volatility, Clal Insurance Enterprises is 1.13 times less risky than Ravad. It trades about 0.05 of its potential returns per unit of risk. Ravad is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 49,300 in Ravad on September 12, 2024 and sell it today you would earn a total of 38,600 from holding Ravad or generate 78.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clal Insurance Enterprises vs. Ravad
Performance |
| Timeline |
| Clal Insurance Enter |
| Ravad |
Clal Insurance and Ravad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clal Insurance and Ravad
The main advantage of trading using opposite Clal Insurance and Ravad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Insurance position performs unexpectedly, Ravad 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 Ravad will offset losses from the drop in Ravad's long position.| Clal Insurance vs. Bank Hapoalim | Clal Insurance vs. Israel Discount Bank | Clal Insurance vs. Mizrahi Tefahot | Clal Insurance vs. Bezeq Israeli Telecommunication |
| Ravad vs. Isras Investment | Ravad vs. Sella Real Estate | Ravad vs. Harel Insurance Investments | Ravad vs. B Communications |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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