Correlation Between Migdal Insurance and Scope Metals
Can any of the company-specific risk be diversified away by investing in both Migdal Insurance and Scope Metals 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 Scope Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Migdal Insurance and Scope Metals Group, you can compare the effects of market volatilities on Migdal Insurance and Scope Metals 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 Scope Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Migdal Insurance and Scope Metals.
Diversification Opportunities for Migdal Insurance and Scope Metals
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Migdal and Scope is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Scope Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scope Metals Group 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 Scope Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scope Metals Group has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Scope Metals go up and down completely randomly.
Pair Corralation between Migdal Insurance and Scope Metals
Assuming the 90 days trading horizon Migdal Insurance is expected to generate 0.8 times more return on investment than Scope Metals. However, Migdal Insurance is 1.25 times less risky than Scope Metals. It trades about 0.23 of its potential returns per unit of risk. Scope Metals Group is currently generating about 0.09 per unit of risk. If you would invest 44,192 in Migdal Insurance on August 28, 2024 and sell it today you would earn a total of 19,558 from holding Migdal Insurance or generate 44.26% 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. Scope Metals Group
Performance |
| Timeline |
| Migdal Insurance |
| Scope Metals Group |
Migdal Insurance and Scope Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Migdal Insurance and Scope Metals
The main advantage of trading using opposite Migdal Insurance and Scope Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Migdal Insurance position performs unexpectedly, Scope Metals 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 Scope Metals will offset losses from the drop in Scope Metals' 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 |
| Scope Metals vs. Delek Automotive Systems | Scope Metals vs. Kerur Holdings | Scope Metals vs. Neto ME Holdings | Scope Metals vs. Bank Leumi Le Israel |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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