Correlation Between Harel Insurance and Arad
Can any of the company-specific risk be diversified away by investing in both Harel Insurance and Arad 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 Harel Insurance and Arad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harel Insurance Investments and Arad, you can compare the effects of market volatilities on Harel Insurance and Arad 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 Harel Insurance with a short position of Arad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harel Insurance and Arad.
Diversification Opportunities for Harel Insurance and Arad
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Harel and Arad is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Harel Insurance Investments and Arad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arad and Harel 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 Harel Insurance Investments are associated (or correlated) with Arad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arad has no effect on the direction of Harel Insurance i.e., Harel Insurance and Arad go up and down completely randomly.
Pair Corralation between Harel Insurance and Arad
Assuming the 90 days trading horizon Harel Insurance Investments is expected to generate 1.24 times more return on investment than Arad. However, Harel Insurance is 1.24 times more volatile than Arad. It trades about 0.05 of its potential returns per unit of risk. Arad is currently generating about 0.03 per unit of risk. If you would invest 311,053 in Harel Insurance Investments on August 28, 2024 and sell it today you would earn a total of 123,447 from holding Harel Insurance Investments or generate 39.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harel Insurance Investments vs. Arad
Performance |
| Timeline |
| Harel Insurance Inve |
| Arad |
Harel Insurance and Arad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harel Insurance and Arad
The main advantage of trading using opposite Harel Insurance and Arad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harel Insurance position performs unexpectedly, Arad 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 Arad will offset losses from the drop in Arad's long position.| Harel Insurance vs. Migdal Insurance | Harel Insurance vs. Clal Insurance Enterprises | Harel Insurance vs. Bank Hapoalim | Harel Insurance vs. Bank Leumi Le Israel |
| Arad vs. Libra Insurance | Arad vs. Arad Investment Industrial | Arad vs. Clal Insurance Enterprises | Arad vs. Hiron Trade Investments Industrial |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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