Correlation Between Migdal Insurance and Oil Refineries
Can any of the company-specific risk be diversified away by investing in both Migdal Insurance and Oil Refineries 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 Oil Refineries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Migdal Insurance and Oil Refineries, you can compare the effects of market volatilities on Migdal Insurance and Oil Refineries 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 Oil Refineries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Migdal Insurance and Oil Refineries.
Diversification Opportunities for Migdal Insurance and Oil Refineries
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Migdal and Oil is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Oil Refineries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Refineries 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 Oil Refineries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Refineries has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Oil Refineries go up and down completely randomly.
Pair Corralation between Migdal Insurance and Oil Refineries
Assuming the 90 days trading horizon Migdal Insurance is expected to generate 0.76 times more return on investment than Oil Refineries. However, Migdal Insurance is 1.31 times less risky than Oil Refineries. It trades about 0.22 of its potential returns per unit of risk. Oil Refineries is currently generating about -0.08 per unit of risk. If you would invest 60,900 in Migdal Insurance on September 1, 2024 and sell it today you would earn a total of 3,790 from holding Migdal Insurance or generate 6.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Migdal Insurance vs. Oil Refineries
Performance |
| Timeline |
| Migdal Insurance |
| Oil Refineries |
Migdal Insurance and Oil Refineries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Migdal Insurance and Oil Refineries
The main advantage of trading using opposite Migdal Insurance and Oil Refineries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Migdal Insurance position performs unexpectedly, Oil Refineries 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 Oil Refineries will offset losses from the drop in Oil Refineries' long position.| Migdal Insurance vs. Menif Financial Services | Migdal Insurance vs. Accel Solutions Group | Migdal Insurance vs. Rani Zim Shopping | Migdal Insurance vs. Rapac Communication Infrastructure |
| Oil Refineries vs. Delek Group | Oil Refineries vs. Bank Leumi Le Israel | Oil Refineries vs. ICL Israel Chemicals | Oil Refineries 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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