Correlation Between Migdal Insurance and Satcom Systems
Can any of the company-specific risk be diversified away by investing in both Migdal Insurance and Satcom Systems 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 Satcom Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Migdal Insurance and Satcom Systems, you can compare the effects of market volatilities on Migdal Insurance and Satcom Systems 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 Satcom Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Migdal Insurance and Satcom Systems.
Diversification Opportunities for Migdal Insurance and Satcom Systems
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Migdal and Satcom is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Satcom Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satcom Systems 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 Satcom Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satcom Systems has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Satcom Systems go up and down completely randomly.
Pair Corralation between Migdal Insurance and Satcom Systems
Assuming the 90 days trading horizon Migdal Insurance is expected to generate 2.7 times less return on investment than Satcom Systems. But when comparing it to its historical volatility, Migdal Insurance is 2.27 times less risky than Satcom Systems. It trades about 0.07 of its potential returns per unit of risk. Satcom Systems is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,060 in Satcom Systems on August 29, 2024 and sell it today you would earn a total of 3,620 from holding Satcom Systems or generate 118.3% 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. Satcom Systems
Performance |
| Timeline |
| Migdal Insurance |
| Satcom Systems |
Migdal Insurance and Satcom Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Migdal Insurance and Satcom Systems
The main advantage of trading using opposite Migdal Insurance and Satcom Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Migdal Insurance position performs unexpectedly, Satcom Systems 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 Satcom Systems will offset losses from the drop in Satcom Systems' long position.| Migdal Insurance vs. Elbit Systems | Migdal Insurance vs. Discount Investment Corp | Migdal Insurance vs. Clal Insurance Enterprises | Migdal Insurance vs. AudioCodes |
| Satcom Systems vs. Israel China Biotechnology | Satcom Systems vs. Elbit Medical Technologies | Satcom Systems vs. Ilex Medical | Satcom Systems vs. Imed Infinity Medical Limited |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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