Correlation Between Harel Insurance and IDI Insurance
Can any of the company-specific risk be diversified away by investing in both Harel Insurance 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 Harel Insurance and IDI Insurance 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 IDI Insurance, you can compare the effects of market volatilities on Harel Insurance 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 Harel Insurance with a short position of IDI Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harel Insurance and IDI Insurance.
Diversification Opportunities for Harel Insurance and IDI Insurance
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Harel and IDI is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Harel Insurance Investments and IDI Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDI Insurance 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 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 Harel Insurance i.e., Harel Insurance and IDI Insurance go up and down completely randomly.
Pair Corralation between Harel Insurance and IDI Insurance
Assuming the 90 days trading horizon Harel Insurance is expected to generate 1.4 times less return on investment than IDI Insurance. But when comparing it to its historical volatility, Harel Insurance Investments is 1.23 times less risky than IDI Insurance. It trades about 0.34 of its potential returns per unit of risk. IDI Insurance is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 1,306,000 in IDI Insurance on November 3, 2024 and sell it today you would earn a total of 184,000 from holding IDI Insurance or generate 14.09% 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. IDI Insurance
Performance |
| Timeline |
| Harel Insurance Inve |
| IDI Insurance |
Harel Insurance and IDI Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harel Insurance and IDI Insurance
The main advantage of trading using opposite Harel Insurance and IDI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harel Insurance 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.| Harel Insurance vs. Migdal Insurance | Harel Insurance vs. Clal Insurance Enterprises | Harel Insurance vs. Bank Hapoalim | Harel Insurance vs. Bank Leumi Le Israel |
| IDI Insurance vs. Migdal Insurance | IDI Insurance vs. Clal Insurance Enterprises | IDI Insurance vs. Bank Hapoalim | IDI Insurance vs. Bank Leumi Le Israel |
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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