Correlation Between Migdal Insurance and Poalim Ibi
Can any of the company-specific risk be diversified away by investing in both Migdal Insurance and Poalim Ibi 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 Poalim Ibi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Migdal Insurance and Poalim Ibi, you can compare the effects of market volatilities on Migdal Insurance and Poalim Ibi 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 Poalim Ibi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Migdal Insurance and Poalim Ibi.
Diversification Opportunities for Migdal Insurance and Poalim Ibi
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Migdal and Poalim is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Poalim Ibi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poalim Ibi 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 Poalim Ibi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poalim Ibi has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Poalim Ibi go up and down completely randomly.
Pair Corralation between Migdal Insurance and Poalim Ibi
Assuming the 90 days trading horizon Migdal Insurance is expected to generate 0.84 times more return on investment than Poalim Ibi. However, Migdal Insurance is 1.18 times less risky than Poalim Ibi. It trades about 0.12 of its potential returns per unit of risk. Poalim Ibi is currently generating about 0.03 per unit of risk. If you would invest 41,930 in Migdal Insurance on August 26, 2024 and sell it today you would earn a total of 21,210 from holding Migdal Insurance or generate 50.58% 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. Poalim Ibi
Performance |
| Timeline |
| Migdal Insurance |
| Poalim Ibi |
Migdal Insurance and Poalim Ibi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Migdal Insurance and Poalim Ibi
The main advantage of trading using opposite Migdal Insurance and Poalim Ibi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Migdal Insurance position performs unexpectedly, Poalim Ibi 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 Poalim Ibi will offset losses from the drop in Poalim Ibi's long position.| Migdal Insurance vs. Bank Hapoalim | Migdal Insurance vs. Israel Discount Bank | Migdal Insurance vs. Bezeq Israeli Telecommunication | Migdal Insurance vs. Elbit Systems |
| Poalim Ibi vs. Migdal Insurance | Poalim Ibi vs. Electreon Wireless | Poalim Ibi vs. Retailors | Poalim Ibi vs. First International 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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