Correlation Between Migdal Insurance and Reit 1
Can any of the company-specific risk be diversified away by investing in both Migdal Insurance and Reit 1 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 Reit 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Migdal Insurance and Reit 1, you can compare the effects of market volatilities on Migdal Insurance and Reit 1 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 Reit 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Migdal Insurance and Reit 1.
Diversification Opportunities for Migdal Insurance and Reit 1
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Migdal and Reit is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Reit 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reit 1 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 Reit 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reit 1 has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Reit 1 go up and down completely randomly.
Pair Corralation between Migdal Insurance and Reit 1
Assuming the 90 days trading horizon Migdal Insurance is expected to generate 0.88 times more return on investment than Reit 1. However, Migdal Insurance is 1.14 times less risky than Reit 1. It trades about 0.42 of its potential returns per unit of risk. Reit 1 is currently generating about 0.22 per unit of risk. If you would invest 46,640 in Migdal Insurance on August 28, 2024 and sell it today you would earn a total of 17,460 from holding Migdal Insurance or generate 37.44% 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. Reit 1
Performance |
| Timeline |
| Migdal Insurance |
| Reit 1 |
Migdal Insurance and Reit 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Migdal Insurance and Reit 1
The main advantage of trading using opposite Migdal Insurance and Reit 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Migdal Insurance position performs unexpectedly, Reit 1 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 Reit 1 will offset losses from the drop in Reit 1's 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 |
| Reit 1 vs. Israel Canada | Reit 1 vs. Delek Group | Reit 1 vs. Shikun Binui | Reit 1 vs. Israel Discount 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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