Correlation Between Migdal Insurance and Bezeq Israeli
Can any of the company-specific risk be diversified away by investing in both Migdal Insurance and Bezeq Israeli 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 Migdal Insurance and Bezeq Israeli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Migdal Insurance and Bezeq Israeli Telecommunication, you can compare the effects of market volatilities on Migdal Insurance and Bezeq Israeli 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 Migdal Insurance with a short position of Bezeq Israeli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Migdal Insurance and Bezeq Israeli.
Diversification Opportunities for Migdal Insurance and Bezeq Israeli
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Migdal and Bezeq is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Bezeq Israeli Telecommunicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bezeq Israeli Teleco and Migdal 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 Migdal Insurance are associated (or correlated) with Bezeq Israeli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bezeq Israeli Teleco has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Bezeq Israeli go up and down completely randomly.
Pair Corralation between Migdal Insurance and Bezeq Israeli
Assuming the 90 days trading horizon Migdal Insurance is expected to generate 1.35 times more return on investment than Bezeq Israeli. However, Migdal Insurance is 1.35 times more volatile than Bezeq Israeli Telecommunication. It trades about 0.05 of its potential returns per unit of risk. Bezeq Israeli Telecommunication is currently generating about 0.01 per unit of risk. If you would invest 43,754 in Migdal Insurance on August 29, 2024 and sell it today you would earn a total of 20,346 from holding Migdal Insurance or generate 46.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Migdal Insurance vs. Bezeq Israeli Telecommunicatio
Performance |
| Timeline |
| Migdal Insurance |
| Bezeq Israeli Teleco |
Migdal Insurance and Bezeq Israeli Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Migdal Insurance and Bezeq Israeli
The main advantage of trading using opposite Migdal Insurance and Bezeq Israeli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Migdal Insurance position performs unexpectedly, Bezeq Israeli 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 Bezeq Israeli will offset losses from the drop in Bezeq Israeli's long position.| Migdal Insurance vs. Elbit Systems | Migdal Insurance vs. Discount Investment Corp | Migdal Insurance vs. Clal Insurance Enterprises | Migdal Insurance vs. AudioCodes |
| Bezeq Israeli vs. Tower Semiconductor | Bezeq Israeli vs. Israel Discount Bank | Bezeq Israeli vs. B Communications | Bezeq Israeli vs. Holmes Place International |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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