Correlation Between Analyst IMS and Harel Insurance

Can any of the company-specific risk be diversified away by investing in both Analyst IMS 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 Analyst IMS and Harel Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Analyst IMS Investment and Harel Insurance Investments, you can compare the effects of market volatilities on Analyst IMS 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 Analyst IMS with a short position of Harel Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analyst IMS and Harel Insurance.

Diversification Opportunities for Analyst IMS and Harel Insurance

0.92

Correlation Coefficient

Analyst IMS  Harel Insurance

Almost no diversification

The 3 months correlation between Analyst and Harel is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Analyst IMS Investment 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 Analyst IMS 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 Analyst IMS Investment 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 Analyst IMS i.e., Analyst IMS and Harel Insurance go up and down completely randomly.

Pair Corralation between Analyst IMS and Harel Insurance

Assuming the 90 days trading horizon Analyst IMS is expected to generate 1.19 times less return on investment than Harel Insurance. But when comparing it to its historical volatility, Analyst IMS Investment is 1.19 times less risky than Harel Insurance. It trades about 0.33 of its potential returns per unit of risk. Harel Insurance Investments is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  337,904  in Harel Insurance Investments on September 5, 2024 and sell it today you would earn a total of  101,096  from holding Harel Insurance Investments or generate 29.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Analyst IMS Investment  vs.  Harel Insurance Investments

Analyst IMS Investment

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Analyst IMS Investment are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Analyst IMS sustained solid returns over the last few months and may actually be approaching a breakup point.

Harel Insurance Inve

Risk-Adjusted Performance

25 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Harel Insurance Investments are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harel Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Analyst IMS and Harel Insurance

The main advantage of trading using opposite Analyst IMS and Harel Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analyst IMS 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.

The idea behind Analyst IMS Investment and Harel Insurance Investments 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.