Correlation Between Migdal Insurance and Knafaim
Can any of the company-specific risk be diversified away by investing in both Migdal Insurance and Knafaim 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 Knafaim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Migdal Insurance and Knafaim, you can compare the effects of market volatilities on Migdal Insurance and Knafaim 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 Knafaim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Migdal Insurance and Knafaim.
Diversification Opportunities for Migdal Insurance and Knafaim
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Migdal and Knafaim is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Knafaim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knafaim 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 Knafaim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knafaim has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Knafaim go up and down completely randomly.
Pair Corralation between Migdal Insurance and Knafaim
Assuming the 90 days trading horizon Migdal Insurance is expected to generate 1.07 times less return on investment than Knafaim. But when comparing it to its historical volatility, Migdal Insurance is 1.25 times less risky than Knafaim. It trades about 0.12 of its potential returns per unit of risk. Knafaim is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 88,656 in Knafaim on August 25, 2024 and sell it today you would earn a total of 43,844 from holding Knafaim or generate 49.45% 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. Knafaim
Performance |
| Timeline |
| Migdal Insurance |
| Knafaim |
Migdal Insurance and Knafaim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Migdal Insurance and Knafaim
The main advantage of trading using opposite Migdal Insurance and Knafaim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Migdal Insurance position performs unexpectedly, Knafaim 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 Knafaim will offset losses from the drop in Knafaim's long position.| Migdal Insurance vs. Bank Hapoalim | Migdal Insurance vs. Israel Discount Bank | Migdal Insurance vs. Mizrahi Tefahot | Migdal Insurance 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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