Correlation Between Migdal Insurance and Capital Point

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

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

Diversification Opportunities for Migdal Insurance and Capital Point

-0.07

Correlation Coefficient

Migdal Insurance  Capital Point

Good diversification

The 3 months correlation between Migdal and Capital is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Capital Point in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Point and Migdal 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 Migdal Insurance are associated (or correlated) with Capital Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Point has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Capital Point go up and down completely randomly.

Pair Corralation between Migdal Insurance and Capital Point

Assuming the 90 days trading horizon Migdal Insurance is expected to generate 1.13 times more return on investment than Capital Point. However, Migdal Insurance is 1.13 times more volatile than Capital Point. It trades about 0.02 of its potential returns per unit of risk. Capital Point is currently generating about -0.19 per unit of risk. If you would invest  67,560  in Migdal Insurance on December 30, 2024 and sell it today you would earn a total of  380.00  from holding Migdal Insurance or generate 0.56% return on investment over 90 days.

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

Migdal Insurance  vs.  Capital Point

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.

Capital Point

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital Point has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Migdal Insurance and Capital Point

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

The idea behind Migdal Insurance and Capital Point 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.