Correlation Between Isras Investment and Harel Insurance

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

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

Diversification Opportunities for Isras Investment and Harel Insurance

-0.52

Correlation Coefficient

Isras Investment  Harel Insurance

Excellent diversification

The 3 months correlation between Isras and Harel is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Isras 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 Isras Investment 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 Isras 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 Isras Investment i.e., Isras Investment and Harel Insurance go up and down completely randomly.

Pair Corralation between Isras Investment and Harel Insurance

Assuming the 90 days trading horizon Isras Investment is expected to under-perform the Harel Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Isras Investment is 1.22 times less risky than Harel Insurance. The stock trades about -0.07 of its potential returns per unit of risk. The Harel Insurance Investments is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  491,308  in Harel Insurance Investments on December 30, 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Isras Investment  vs.  Harel Insurance Investments

Isras Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Isras Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 Isras Investment and Harel Insurance

The main advantage of trading using opposite Isras Investment and Harel Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Isras Investment 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 Isras 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.