Correlation Between Harel Insurance and Castro
Can any of the company-specific risk be diversified away by investing in both Harel Insurance and Castro 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 Castro 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 Castro, you can compare the effects of market volatilities on Harel Insurance and Castro 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 Castro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harel Insurance and Castro.
Diversification Opportunities for Harel Insurance and Castro
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Harel and Castro is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Harel Insurance Investments and Castro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castro 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 Castro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castro has no effect on the direction of Harel Insurance i.e., Harel Insurance and Castro go up and down completely randomly.
Pair Corralation between Harel Insurance and Castro
Assuming the 90 days trading horizon Harel Insurance Investments is expected to generate 0.96 times more return on investment than Castro. However, Harel Insurance Investments is 1.05 times less risky than Castro. It trades about 0.18 of its potential returns per unit of risk. Castro is currently generating about 0.15 per unit of risk. If you would invest 310,214 in Harel Insurance Investments on September 3, 2024 and sell it today you would earn a total of 127,786 from holding Harel Insurance Investments or generate 41.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harel Insurance Investments vs. Castro
Performance |
| Timeline |
| Harel Insurance Inve |
| Castro |
Harel Insurance and Castro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harel Insurance and Castro
The main advantage of trading using opposite Harel Insurance and Castro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harel Insurance position performs unexpectedly, Castro 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 Castro will offset losses from the drop in Castro's long position.| Harel Insurance vs. Bank Hapoalim | Harel Insurance vs. Israel Discount Bank | Harel Insurance vs. First International Bank | Harel Insurance vs. Elbit Systems |
| Castro vs. Fox Wizel | Castro vs. Golf Co Group | Castro vs. Bezeq Israeli Telecommunication | Castro vs. Azrieli Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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