Correlation Between Inrom Construction and Migdal Insurance
Can any of the company-specific risk be diversified away by investing in both Inrom Construction and Migdal 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 Inrom Construction and Migdal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inrom Construction Industries and Migdal Insurance, you can compare the effects of market volatilities on Inrom Construction and Migdal 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 Inrom Construction with a short position of Migdal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inrom Construction and Migdal Insurance.
Diversification Opportunities for Inrom Construction and Migdal Insurance
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Inrom and Migdal is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Inrom Construction Industries and Migdal Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Migdal Insurance and Inrom Construction 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 Inrom Construction Industries are associated (or correlated) with Migdal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Migdal Insurance has no effect on the direction of Inrom Construction i.e., Inrom Construction and Migdal Insurance go up and down completely randomly.
Pair Corralation between Inrom Construction and Migdal Insurance
Assuming the 90 days trading horizon Inrom Construction is expected to generate 5.35 times less return on investment than Migdal Insurance. In addition to that, Inrom Construction is 1.5 times more volatile than Migdal Insurance. It trades about 0.06 of its total potential returns per unit of risk. Migdal Insurance is currently generating about 0.49 per unit of volatility. If you would invest 66,880 in Migdal Insurance on October 22, 2024 and sell it today you would earn a total of 6,450 from holding Migdal Insurance or generate 9.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inrom Construction Industries vs. Migdal Insurance
Performance |
| Timeline |
| Inrom Construction |
| Migdal Insurance |
Inrom Construction and Migdal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inrom Construction and Migdal Insurance
The main advantage of trading using opposite Inrom Construction and Migdal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inrom Construction position performs unexpectedly, Migdal 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 Migdal Insurance will offset losses from the drop in Migdal Insurance's long position.| Inrom Construction vs. Israel Discount Bank | Inrom Construction vs. Shufersal | Inrom Construction vs. Sella Real Estate | Inrom Construction vs. Hilan |
| Migdal Insurance vs. Harel Insurance Investments | Migdal Insurance vs. Clal Insurance Enterprises | Migdal Insurance vs. Bank Hapoalim | Migdal 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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