Correlation Between Dan Hotels and Migdal Insurance

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

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

Diversification Opportunities for Dan Hotels and Migdal Insurance

0.49

Correlation Coefficient

Dan Hotels  Migdal Insurance

Very weak diversification

The 3 months correlation between Dan and Migdal is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dan Hotels and Migdal Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Migdal Insurance and Dan Hotels 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 Dan Hotels 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 Dan Hotels i.e., Dan Hotels and Migdal Insurance go up and down completely randomly.

Pair Corralation between Dan Hotels and Migdal Insurance

Assuming the 90 days trading horizon Dan Hotels is expected to generate 0.77 times more return on investment than Migdal Insurance. However, Dan Hotels is 1.3 times less risky than Migdal Insurance. It trades about 0.08 of its potential returns per unit of risk. Migdal Insurance is currently generating about 0.02 per unit of risk. If you would invest  221,800  in Dan Hotels on December 29, 2024 and sell it today you would earn a total of  14,100  from holding Dan Hotels or generate 6.36% return on investment over 90 days.

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

Dan Hotels  vs.  Migdal Insurance

Dan Hotels

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dan Hotels are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dan Hotels may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Migdal Insurance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Migdal Insurance are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Migdal Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dan Hotels and Migdal Insurance

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

The idea behind Dan Hotels and Migdal Insurance 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.