Correlation Between Value Capital and Clal Insurance
Can any of the company-specific risk be diversified away by investing in both Value Capital 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 Value Capital and Clal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Capital One and Clal Insurance Enterprises, you can compare the effects of market volatilities on Value Capital 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 Value Capital with a short position of Clal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Capital and Clal Insurance.
Diversification Opportunities for Value Capital and Clal Insurance
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Value and Clal is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Value Capital One 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 Value Capital 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 Value Capital One 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 Value Capital i.e., Value Capital and Clal Insurance go up and down completely randomly.
Pair Corralation between Value Capital and Clal Insurance
Assuming the 90 days trading horizon Value Capital is expected to generate 1.57 times less return on investment than Clal Insurance. In addition to that, Value Capital is 3.63 times more volatile than Clal Insurance Enterprises. It trades about 0.05 of its total potential returns per unit of risk. Clal Insurance Enterprises is currently generating about 0.29 per unit of volatility. If you would invest 556,743 in Clal Insurance Enterprises on November 3, 2024 and sell it today you would earn a total of 380,257 from holding Clal Insurance Enterprises or generate 68.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Value Capital One vs. Clal Insurance Enterprises
Performance |
| Timeline |
| Value Capital One |
| Clal Insurance Enter |
Value Capital and Clal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Capital and Clal Insurance
The main advantage of trading using opposite Value Capital and Clal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Capital 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.| Value Capital vs. Willy Food | Value Capital vs. Propert Buil | Value Capital vs. Rekah Pharmaceutical Industry | Value Capital vs. Bezeq Israeli Telecommunication |
| Clal Insurance vs. Migdal Insurance | Clal Insurance vs. Harel Insurance Investments | Clal Insurance vs. Israel Discount Bank | Clal Insurance vs. Bank Hapoalim |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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