Correlation Between Harel Insurance and IES Holdings
Can any of the company-specific risk be diversified away by investing in both Harel Insurance and IES Holdings 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 IES Holdings 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 IES Holdings, you can compare the effects of market volatilities on Harel Insurance and IES Holdings 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 IES Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harel Insurance and IES Holdings.
Diversification Opportunities for Harel Insurance and IES Holdings
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harel and IES is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Harel Insurance Investments and IES Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IES Holdings 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 IES Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IES Holdings has no effect on the direction of Harel Insurance i.e., Harel Insurance and IES Holdings go up and down completely randomly.
Pair Corralation between Harel Insurance and IES Holdings
Assuming the 90 days trading horizon Harel Insurance is expected to generate 1.06 times less return on investment than IES Holdings. In addition to that, Harel Insurance is 1.02 times more volatile than IES Holdings. It trades about 0.6 of its total potential returns per unit of risk. IES Holdings is currently generating about 0.65 per unit of volatility. If you would invest 1,958,000 in IES Holdings on August 29, 2024 and sell it today you would earn a total of 403,000 from holding IES Holdings or generate 20.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harel Insurance Investments vs. IES Holdings
Performance |
| Timeline |
| Harel Insurance Inve |
| IES Holdings |
Harel Insurance and IES Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harel Insurance and IES Holdings
The main advantage of trading using opposite Harel Insurance and IES Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harel Insurance position performs unexpectedly, IES Holdings 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 IES Holdings will offset losses from the drop in IES Holdings' 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 |
| IES Holdings vs. Israel Canada | IES Holdings vs. Delek Group | IES Holdings vs. Shikun Binui | IES Holdings vs. Israel Discount Bank |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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