Correlation Between American International and Menora Mivtachim

Can any of the company-specific risk be diversified away by investing in both American International and Menora Mivtachim 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 American International and Menora Mivtachim into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American International Group and Menora Mivtachim Holdings, you can compare the effects of market volatilities on American International and Menora Mivtachim 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 American International with a short position of Menora Mivtachim. Check out your portfolio center. Please also check ongoing floating volatility patterns of American International and Menora Mivtachim.

Diversification Opportunities for American International and Menora Mivtachim

-0.74

Correlation Coefficient

American International  Menora Mivtachim

Pay attention - limited upside

The 3 months correlation between American and Menora is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding American International Group and Menora Mivtachim Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Menora Mivtachim Holdings and American International 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 American International Group are associated (or correlated) with Menora Mivtachim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Menora Mivtachim Holdings has no effect on the direction of American International i.e., American International and Menora Mivtachim go up and down completely randomly.

Pair Corralation between American International and Menora Mivtachim

Considering the 90-day investment horizon American International is expected to generate 2.12 times less return on investment than Menora Mivtachim. In addition to that, American International is 1.54 times more volatile than Menora Mivtachim Holdings. It trades about 0.03 of its total potential returns per unit of risk. Menora Mivtachim Holdings is currently generating about 0.1 per unit of volatility. If you would invest  1,563  in Menora Mivtachim Holdings on October 7, 2024 and sell it today you would earn a total of  942.00  from holding Menora Mivtachim Holdings or generate 60.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

American International Group  vs.  Menora Mivtachim Holdings

American International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American International Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, American International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Menora Mivtachim Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Menora Mivtachim Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Menora Mivtachim may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with American International and Menora Mivtachim

The main advantage of trading using opposite American International and Menora Mivtachim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American International position performs unexpectedly, Menora Mivtachim 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 Menora Mivtachim will offset losses from the drop in Menora Mivtachim's long position.

The idea behind American International Group and Menora Mivtachim Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.