Correlation Between Migdal Insurance and Brimag L
Can any of the company-specific risk be diversified away by investing in both Migdal Insurance and Brimag L 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 Brimag L into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Migdal Insurance and Brimag L, you can compare the effects of market volatilities on Migdal Insurance and Brimag L 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 Brimag L. Check out your portfolio center. Please also check ongoing floating volatility patterns of Migdal Insurance and Brimag L.
Diversification Opportunities for Migdal Insurance and Brimag L
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Migdal and Brimag is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Brimag L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brimag L 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 Brimag L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brimag L has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Brimag L go up and down completely randomly.
Pair Corralation between Migdal Insurance and Brimag L
Assuming the 90 days trading horizon Migdal Insurance is expected to generate 0.6 times more return on investment than Brimag L. However, Migdal Insurance is 1.67 times less risky than Brimag L. It trades about 0.13 of its potential returns per unit of risk. Brimag L is currently generating about 0.08 per unit of risk. If you would invest 41,159 in Migdal Insurance on September 14, 2024 and sell it today you would earn a total of 27,141 from holding Migdal Insurance or generate 65.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Migdal Insurance vs. Brimag L
Performance |
| Timeline |
| Migdal Insurance |
| Brimag L |
Migdal Insurance and Brimag L Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Migdal Insurance and Brimag L
The main advantage of trading using opposite Migdal Insurance and Brimag L positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Migdal Insurance position performs unexpectedly, Brimag L 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 Brimag L will offset losses from the drop in Brimag L's long position.| Migdal Insurance vs. Harel Insurance Investments | Migdal Insurance vs. Clal Insurance Enterprises | Migdal Insurance vs. Bank Hapoalim | Migdal Insurance vs. Bank Leumi Le Israel |
| Brimag L vs. Migdal Insurance | Brimag L vs. Clal Insurance Enterprises | Brimag L vs. Bank Leumi Le Israel | Brimag L 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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