Correlation Between Nissan and Harel Insurance
Can any of the company-specific risk be diversified away by investing in both Nissan and Harel 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 Nissan and Harel Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nissan and Harel Insurance Investments, you can compare the effects of market volatilities on Nissan and Harel 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 Nissan with a short position of Harel Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nissan and Harel Insurance.
Diversification Opportunities for Nissan and Harel Insurance
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nissan and Harel is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Nissan and Harel Insurance Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harel Insurance Inve and Nissan 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 Nissan are associated (or correlated) with Harel Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harel Insurance Inve has no effect on the direction of Nissan i.e., Nissan and Harel Insurance go up and down completely randomly.
Pair Corralation between Nissan and Harel Insurance
Assuming the 90 days trading horizon Nissan is expected to under-perform the Harel Insurance. In addition to that, Nissan is 1.46 times more volatile than Harel Insurance Investments. It trades about -0.03 of its total potential returns per unit of risk. Harel Insurance Investments is currently generating about 0.16 per unit of volatility. If you would invest 322,650 in Harel Insurance Investments on September 1, 2024 and sell it today you would earn a total of 115,350 from holding Harel Insurance Investments or generate 35.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nissan vs. Harel Insurance Investments
Performance |
| Timeline |
| Nissan |
| Harel Insurance Inve |
Nissan and Harel Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nissan and Harel Insurance
The main advantage of trading using opposite Nissan and Harel Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nissan position performs unexpectedly, Harel 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 Harel Insurance will offset losses from the drop in Harel Insurance's long position.| Nissan vs. Bezeq Israeli Telecommunication | Nissan vs. Brainsway | Nissan vs. Mivne Real Estate | Nissan vs. Photomyne |
| Harel Insurance vs. Menif Financial Services | Harel Insurance vs. Accel Solutions Group | Harel Insurance vs. Rani Zim Shopping | Harel Insurance vs. Rapac Communication Infrastructure |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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