Correlation Between IDI Insurance and Clal Industries

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

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

Diversification Opportunities for IDI Insurance and Clal Industries

0.0

Correlation Coefficient

IDI Insurance  Clal Industries

Pay attention - limited upside

The 3 months correlation between IDI and Clal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IDI Insurance and Clal Industries and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Industries and IDI 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 IDI Insurance are associated (or correlated) with Clal Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Industries has no effect on the direction of IDI Insurance i.e., IDI Insurance and Clal Industries go up and down completely randomly.

Pair Corralation between IDI Insurance and Clal Industries

If you would invest  1,151,900  in IDI Insurance on September 16, 2024 and sell it today you would earn a total of  198,100  from holding IDI Insurance or generate 17.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.13%
Values	Daily Returns

IDI Insurance  vs.  Clal Industries and

IDI Insurance

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IDI Insurance are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IDI Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Clal Industries

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Clal Industries and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Clal Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IDI Insurance and Clal Industries

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

The idea behind IDI Insurance and Clal Industries and 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.