Correlation Between Netz Hotels and Migdal Insurance
Can any of the company-specific risk be diversified away by investing in both Netz Hotels 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 Netz Hotels and Migdal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netz Hotels and Migdal Insurance, you can compare the effects of market volatilities on Netz Hotels 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 Netz Hotels with a short position of Migdal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netz Hotels and Migdal Insurance.
Diversification Opportunities for Netz Hotels and Migdal Insurance
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Netz and Migdal is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Netz Hotels and Migdal Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Migdal Insurance and Netz Hotels 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 Netz Hotels 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 Netz Hotels i.e., Netz Hotels and Migdal Insurance go up and down completely randomly.
Pair Corralation between Netz Hotels and Migdal Insurance
Assuming the 90 days trading horizon Netz Hotels is expected to generate 2.0 times less return on investment than Migdal Insurance. In addition to that, Netz Hotels is 2.46 times more volatile than Migdal Insurance. It trades about 0.09 of its total potential returns per unit of risk. Migdal Insurance is currently generating about 0.43 per unit of volatility. If you would invest 46,360 in Migdal Insurance on August 29, 2024 and sell it today you would earn a total of 17,740 from holding Migdal Insurance or generate 38.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netz Hotels vs. Migdal Insurance
Performance |
| Timeline |
| Netz Hotels |
| Migdal Insurance |
Netz Hotels and Migdal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netz Hotels and Migdal Insurance
The main advantage of trading using opposite Netz Hotels and Migdal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netz Hotels 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.| Netz Hotels vs. Direct Capital Investments | Netz Hotels vs. Itay Financial AA | Netz Hotels vs. B Communications | Netz Hotels vs. Holmes Place International |
| Migdal Insurance vs. Elbit Systems | Migdal Insurance vs. Discount Investment Corp | Migdal Insurance vs. Clal Insurance Enterprises | Migdal Insurance vs. AudioCodes |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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