Correlation Between Migdal Insurance and Nextferm Technologies
Can any of the company-specific risk be diversified away by investing in both Migdal Insurance and Nextferm Technologies 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 Nextferm Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Migdal Insurance and Nextferm Technologies, you can compare the effects of market volatilities on Migdal Insurance and Nextferm Technologies 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 Nextferm Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Migdal Insurance and Nextferm Technologies.
Diversification Opportunities for Migdal Insurance and Nextferm Technologies
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Migdal and Nextferm is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Nextferm Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextferm Technologies 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 Nextferm Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextferm Technologies has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Nextferm Technologies go up and down completely randomly.
Pair Corralation between Migdal Insurance and Nextferm Technologies
Assuming the 90 days trading horizon Migdal Insurance is expected to generate 0.35 times more return on investment than Nextferm Technologies. However, Migdal Insurance is 2.9 times less risky than Nextferm Technologies. It trades about 0.07 of its potential returns per unit of risk. Nextferm Technologies is currently generating about -0.06 per unit of risk. If you would invest 40,329 in Migdal Insurance on September 5, 2024 and sell it today you would earn a total of 28,121 from holding Migdal Insurance or generate 69.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Migdal Insurance vs. Nextferm Technologies
Performance |
| Timeline |
| Migdal Insurance |
| Nextferm Technologies |
Migdal Insurance and Nextferm Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Migdal Insurance and Nextferm Technologies
The main advantage of trading using opposite Migdal Insurance and Nextferm Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Migdal Insurance position performs unexpectedly, Nextferm Technologies 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 Nextferm Technologies will offset losses from the drop in Nextferm Technologies' long position.| Migdal Insurance vs. Bank Hapoalim | Migdal Insurance vs. Israel Discount Bank | Migdal Insurance vs. First International Bank | Migdal Insurance vs. Elbit Systems |
| Nextferm Technologies vs. Strauss Group | Nextferm Technologies vs. Neto Malinda | Nextferm Technologies vs. Kerur Holdings | Nextferm Technologies vs. Willy Food |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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