Correlation Between Clal Insurance and Electra

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

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

Diversification Opportunities for Clal Insurance and Electra

0.96

Correlation Coefficient

Clal Insurance  Electra

Almost no diversification

The 3 months correlation between Clal and Electra is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and Electra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electra and Clal Insurance 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 Clal Insurance Enterprises are associated (or correlated) with Electra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electra has no effect on the direction of Clal Insurance i.e., Clal Insurance and Electra go up and down completely randomly.

Pair Corralation between Clal Insurance and Electra

Assuming the 90 days trading horizon Clal Insurance is expected to generate 1.09 times less return on investment than Electra. But when comparing it to its historical volatility, Clal Insurance Enterprises is 1.18 times less risky than Electra. It trades about 0.31 of its potential returns per unit of risk. Electra is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  14,520,000  in Electra on September 3, 2024 and sell it today you would earn a total of  4,823,000  from holding Electra or generate 33.22% return on investment over 90 days.

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

Clal Insurance Enterprises  vs.  Electra

Clal Insurance Enter

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clal Insurance Enterprises are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clal Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Electra

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Electra are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Electra sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clal Insurance and Electra

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

The idea behind Clal Insurance Enterprises and Electra 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.