Correlation Between Naphtha and Migdal Insurance
Can any of the company-specific risk be diversified away by investing in both Naphtha and Migdal 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 Naphtha and Migdal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naphtha and Migdal Insurance, you can compare the effects of market volatilities on Naphtha and Migdal 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 Naphtha with a short position of Migdal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naphtha and Migdal Insurance.
Diversification Opportunities for Naphtha and Migdal Insurance
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Naphtha and Migdal is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Naphtha and Migdal Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Migdal Insurance and Naphtha 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 Naphtha are associated (or correlated) with Migdal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Migdal Insurance has no effect on the direction of Naphtha i.e., Naphtha and Migdal Insurance go up and down completely randomly.
Pair Corralation between Naphtha and Migdal Insurance
Assuming the 90 days trading horizon Naphtha is expected to generate 1.12 times more return on investment than Migdal Insurance. However, Naphtha is 1.12 times more volatile than Migdal Insurance. It trades about 0.08 of its potential returns per unit of risk. Migdal Insurance is currently generating about 0.09 per unit of risk. If you would invest 126,308 in Naphtha on November 19, 2024 and sell it today you would earn a total of 118,792 from holding Naphtha or generate 94.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naphtha vs. Migdal Insurance
Performance |
| Timeline |
| Naphtha |
| Migdal Insurance |
Naphtha and Migdal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naphtha and Migdal Insurance
The main advantage of trading using opposite Naphtha and Migdal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naphtha position performs unexpectedly, Migdal 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 Migdal Insurance will offset losses from the drop in Migdal Insurance's long position.| Naphtha vs. Migdal Insurance | Naphtha vs. Harel Insurance Investments | Naphtha vs. Delek Automotive Systems | Naphtha vs. Airport City |
| Migdal Insurance vs. Harel Insurance Investments | Migdal Insurance vs. Clal Insurance Enterprises | Migdal Insurance vs. Bank Hapoalim | Migdal Insurance 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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