Correlation Between IBI Inv and Harel Insurance

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

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

Diversification Opportunities for IBI Inv and Harel Insurance

0.87

Correlation Coefficient

IBI Inv  Harel Insurance

Very poor diversification

The 3 months correlation between IBI and Harel is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding IBI Inv House 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 IBI Inv 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 IBI Inv House 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 IBI Inv i.e., IBI Inv and Harel Insurance go up and down completely randomly.

Pair Corralation between IBI Inv and Harel Insurance

Assuming the 90 days trading horizon IBI Inv is expected to generate 1.07 times less return on investment than Harel Insurance. In addition to that, IBI Inv is 1.23 times more volatile than Harel Insurance Investments. It trades about 0.15 of its total potential returns per unit of risk. Harel Insurance Investments is currently generating about 0.2 per unit of volatility. If you would invest  491,308  in Harel Insurance Investments on December 29, 2024 and sell it today you would earn a total of  112,792  from holding Harel Insurance Investments or generate 22.96% return on investment over 90 days.

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

IBI Inv House  vs.  Harel Insurance Investments

IBI Inv House

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IBI Inv House are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, IBI Inv sustained solid returns over the last few months and may actually be approaching a breakup point.

Harel Insurance Inve

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harel Insurance Investments are ranked lower than 15 (%) 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 IBI Inv and Harel Insurance

The main advantage of trading using opposite IBI Inv and Harel Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBI Inv 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 IBI Inv House 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.