Correlation Between Discount Investment and IDI Insurance
Can any of the company-specific risk be diversified away by investing in both Discount Investment and IDI Insurance 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 Discount Investment and IDI Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Discount Investment Corp and IDI Insurance, you can compare the effects of market volatilities on Discount Investment and IDI Insurance 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 Discount Investment with a short position of IDI Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discount Investment and IDI Insurance.
Diversification Opportunities for Discount Investment and IDI Insurance
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Discount and IDI is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Discount Investment Corp and IDI Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDI Insurance and Discount Investment 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 Discount Investment Corp are associated (or correlated) with IDI Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDI Insurance has no effect on the direction of Discount Investment i.e., Discount Investment and IDI Insurance go up and down completely randomly.
Pair Corralation between Discount Investment and IDI Insurance
Assuming the 90 days trading horizon Discount Investment Corp is expected to generate 4.23 times more return on investment than IDI Insurance. However, Discount Investment is 4.23 times more volatile than IDI Insurance. It trades about 0.26 of its potential returns per unit of risk. IDI Insurance is currently generating about 0.66 per unit of risk. If you would invest 41,130 in Discount Investment Corp on November 27, 2024 and sell it today you would earn a total of 10,760 from holding Discount Investment Corp or generate 26.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discount Investment Corp vs. IDI Insurance
Performance |
| Timeline |
| Discount Investment Corp |
| IDI Insurance |
Discount Investment and IDI Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discount Investment and IDI Insurance
The main advantage of trading using opposite Discount Investment and IDI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discount Investment position performs unexpectedly, IDI Insurance 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 IDI Insurance will offset losses from the drop in IDI Insurance's long position.| Discount Investment vs. Clal Insurance Enterprises | Discount Investment vs. Israel Discount Bank | Discount Investment vs. Migdal Insurance | Discount Investment vs. Bezeq Israeli Telecommunication |
| IDI Insurance vs. Harel Insurance Investments | IDI Insurance vs. Migdal Insurance | IDI Insurance vs. Menora Miv Hld | IDI Insurance vs. The Phoenix Holdings |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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