Correlation Between Migdal Insurance and Elbit Systems
Can any of the company-specific risk be diversified away by investing in both Migdal Insurance and Elbit Systems 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 Elbit Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Migdal Insurance and Elbit Systems, you can compare the effects of market volatilities on Migdal Insurance and Elbit Systems 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 Elbit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Migdal Insurance and Elbit Systems.
Diversification Opportunities for Migdal Insurance and Elbit Systems
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Migdal and Elbit is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems 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 Elbit Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Systems has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Elbit Systems go up and down completely randomly.
Pair Corralation between Migdal Insurance and Elbit Systems
Assuming the 90 days trading horizon Migdal Insurance is expected to generate 1.13 times less return on investment than Elbit Systems. In addition to that, Migdal Insurance is 1.41 times more volatile than Elbit Systems. It trades about 0.05 of its total potential returns per unit of risk. Elbit Systems is currently generating about 0.08 per unit of volatility. If you would invest 5,945,620 in Elbit Systems on August 24, 2024 and sell it today you would earn a total of 3,314,380 from holding Elbit Systems or generate 55.74% 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. Elbit Systems
Performance |
| Timeline |
| Migdal Insurance |
| Elbit Systems |
Migdal Insurance and Elbit Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Migdal Insurance and Elbit Systems
The main advantage of trading using opposite Migdal Insurance and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Migdal Insurance position performs unexpectedly, Elbit Systems 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 Elbit Systems will offset losses from the drop in Elbit Systems' 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 |
| Elbit Systems vs. Nice | Elbit Systems vs. Bank Leumi Le Israel | Elbit Systems vs. Teva Pharmaceutical Industries | Elbit Systems vs. Bank Hapoalim |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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