Correlation Between Ravad and Migdal Insurance
Can any of the company-specific risk be diversified away by investing in both Ravad 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 Ravad and Migdal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ravad and Migdal Insurance, you can compare the effects of market volatilities on Ravad 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 Ravad with a short position of Migdal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ravad and Migdal Insurance.
Diversification Opportunities for Ravad and Migdal Insurance
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ravad and Migdal is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ravad and Migdal Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Migdal Insurance and Ravad 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 Ravad 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 Ravad i.e., Ravad and Migdal Insurance go up and down completely randomly.
Pair Corralation between Ravad and Migdal Insurance
Assuming the 90 days trading horizon Ravad is expected to generate 1.19 times more return on investment than Migdal Insurance. However, Ravad is 1.19 times more volatile than Migdal Insurance. It trades about 0.07 of its potential returns per unit of risk. Migdal Insurance is currently generating about 0.07 per unit of risk. If you would invest 48,060 in Ravad on September 14, 2024 and sell it today you would earn a total of 38,640 from holding Ravad or generate 80.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Ravad vs. Migdal Insurance
Performance |
| Timeline |
| Ravad |
| Migdal Insurance |
Ravad and Migdal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ravad and Migdal Insurance
The main advantage of trading using opposite Ravad and Migdal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ravad 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.| Ravad vs. Isras Investment | Ravad vs. Sella Real Estate | Ravad vs. Harel Insurance Investments | Ravad vs. B Communications |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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