Correlation Between Harel Insurance and Paz Oil
Can any of the company-specific risk be diversified away by investing in both Harel Insurance and Paz Oil 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 Paz Oil 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 Paz Oil, you can compare the effects of market volatilities on Harel Insurance and Paz Oil 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 Paz Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harel Insurance and Paz Oil.
Diversification Opportunities for Harel Insurance and Paz Oil
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Harel and Paz is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Harel Insurance Investments and Paz Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paz Oil 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 Paz Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paz Oil has no effect on the direction of Harel Insurance i.e., Harel Insurance and Paz Oil go up and down completely randomly.
Pair Corralation between Harel Insurance and Paz Oil
Assuming the 90 days trading horizon Harel Insurance Investments is expected to generate 1.12 times more return on investment than Paz Oil. However, Harel Insurance is 1.12 times more volatile than Paz Oil. It trades about 0.45 of its potential returns per unit of risk. Paz Oil is currently generating about 0.09 per unit of risk. If you would invest 384,800 in Harel Insurance Investments on August 31, 2024 and sell it today you would earn a total of 53,200 from holding Harel Insurance Investments or generate 13.83% 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. Paz Oil
Performance |
| Timeline |
| Harel Insurance Inve |
| Paz Oil |
Harel Insurance and Paz Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harel Insurance and Paz Oil
The main advantage of trading using opposite Harel Insurance and Paz Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harel Insurance position performs unexpectedly, Paz Oil 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 Paz Oil will offset losses from the drop in Paz Oil'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 |
| Paz Oil vs. Fattal 1998 Holdings | Paz Oil vs. El Al Israel | Paz Oil vs. Bank Leumi Le Israel | Paz Oil vs. Teva Pharmaceutical Industries |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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