Correlation Between Mizrahi Tefahot and Clal Insurance
Can any of the company-specific risk be diversified away by investing in both Mizrahi Tefahot and Clal Insurance 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 Mizrahi Tefahot and Clal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mizrahi Tefahot and Clal Insurance Enterprises, you can compare the effects of market volatilities on Mizrahi Tefahot and Clal Insurance 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 Mizrahi Tefahot with a short position of Clal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mizrahi Tefahot and Clal Insurance.
Diversification Opportunities for Mizrahi Tefahot and Clal Insurance
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mizrahi and Clal is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Mizrahi Tefahot and Clal Insurance Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Insurance Enter and Mizrahi Tefahot 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 Mizrahi Tefahot are associated (or correlated) with Clal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Insurance Enter has no effect on the direction of Mizrahi Tefahot i.e., Mizrahi Tefahot and Clal Insurance go up and down completely randomly.
Pair Corralation between Mizrahi Tefahot and Clal Insurance
Assuming the 90 days trading horizon Mizrahi Tefahot is expected to generate 0.85 times more return on investment than Clal Insurance. However, Mizrahi Tefahot is 1.17 times less risky than Clal Insurance. It trades about 0.07 of its potential returns per unit of risk. Clal Insurance Enterprises is currently generating about 0.03 per unit of risk. If you would invest 1,069,718 in Mizrahi Tefahot on August 27, 2024 and sell it today you would earn a total of 530,282 from holding Mizrahi Tefahot or generate 49.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mizrahi Tefahot vs. Clal Insurance Enterprises
Performance |
| Timeline |
| Mizrahi Tefahot |
| Clal Insurance Enter |
Mizrahi Tefahot and Clal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mizrahi Tefahot and Clal Insurance
The main advantage of trading using opposite Mizrahi Tefahot and Clal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mizrahi Tefahot position performs unexpectedly, Clal Insurance 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 Clal Insurance will offset losses from the drop in Clal Insurance's long position.| Mizrahi Tefahot vs. Bank Hapoalim | Mizrahi Tefahot vs. Israel Discount Bank | Mizrahi Tefahot vs. Bezeq Israeli Telecommunication | Mizrahi Tefahot vs. Elbit Systems |
| Clal Insurance vs. Bank Hapoalim | Clal Insurance vs. Israel Discount Bank | Clal Insurance vs. Bezeq Israeli Telecommunication | Clal Insurance vs. Elbit Systems |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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