Correlation Between IDI Insurance and Value Capital
Can any of the company-specific risk be diversified away by investing in both IDI Insurance and Value Capital 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 IDI Insurance and Value Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDI Insurance and Value Capital One, you can compare the effects of market volatilities on IDI Insurance and Value Capital 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 IDI Insurance with a short position of Value Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDI Insurance and Value Capital.
Diversification Opportunities for IDI Insurance and Value Capital
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IDI and Value is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding IDI Insurance and Value Capital One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Capital One and IDI 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 IDI Insurance are associated (or correlated) with Value Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Capital One has no effect on the direction of IDI Insurance i.e., IDI Insurance and Value Capital go up and down completely randomly.
Pair Corralation between IDI Insurance and Value Capital
Assuming the 90 days trading horizon IDI Insurance is expected to generate 0.29 times more return on investment than Value Capital. However, IDI Insurance is 3.43 times less risky than Value Capital. It trades about 0.23 of its potential returns per unit of risk. Value Capital One is currently generating about 0.05 per unit of risk. If you would invest 965,790 in IDI Insurance on November 3, 2024 and sell it today you would earn a total of 524,210 from holding IDI Insurance or generate 54.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IDI Insurance vs. Value Capital One
Performance |
| Timeline |
| IDI Insurance |
| Value Capital One |
IDI Insurance and Value Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDI Insurance and Value Capital
The main advantage of trading using opposite IDI Insurance and Value Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDI Insurance position performs unexpectedly, Value Capital 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 Value Capital will offset losses from the drop in Value Capital's long position.| IDI Insurance vs. Migdal Insurance | IDI Insurance vs. Clal Insurance Enterprises | IDI Insurance vs. Bank Hapoalim | IDI Insurance vs. Bank Leumi Le Israel |
| Value Capital vs. Willy Food | Value Capital vs. Propert Buil | Value Capital vs. Rekah Pharmaceutical Industry | Value Capital vs. Bezeq Israeli Telecommunication |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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