Correlation Between Migdal Insurance and Gencell

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

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

Diversification Opportunities for Migdal Insurance and Gencell

-0.49

Correlation Coefficient

Migdal Insurance  Gencell

Very good diversification

The 3 months correlation between Migdal and Gencell is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Gencell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gencell 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 Gencell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gencell has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Gencell go up and down completely randomly.

Pair Corralation between Migdal Insurance and Gencell

Assuming the 90 days trading horizon Migdal Insurance is expected to generate 0.42 times more return on investment than Gencell. However, Migdal Insurance is 2.36 times less risky than Gencell. It trades about 0.51 of its potential returns per unit of risk. Gencell is currently generating about 0.04 per unit of risk. If you would invest  46,700  in Migdal Insurance on September 12, 2024 and sell it today you would earn a total of  21,900  from holding Migdal Insurance or generate 46.9% return on investment over 90 days.

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

Migdal Insurance  vs.  Gencell

Migdal Insurance

Risk-Adjusted Performance

39 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Migdal Insurance are ranked lower than 39 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Migdal Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Gencell

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gencell are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gencell may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Migdal Insurance and Gencell

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

The idea behind Migdal Insurance and Gencell 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..