Correlation Between Migdal Insurance and Hiron Trade

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

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

Diversification Opportunities for Migdal Insurance and Hiron Trade

0.65

Correlation Coefficient

Migdal Insurance  Hiron Trade

Poor diversification

The 3 months correlation between Migdal and Hiron is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Hiron Trade Investments Indust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiron Trade Investments 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 Hiron Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiron Trade Investments has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Hiron Trade go up and down completely randomly.

Pair Corralation between Migdal Insurance and Hiron Trade

Assuming the 90 days trading horizon Migdal Insurance is expected to generate 1.29 times more return on investment than Hiron Trade. However, Migdal Insurance is 1.29 times more volatile than Hiron Trade Investments Industrial. It trades about 0.09 of its potential returns per unit of risk. Hiron Trade Investments Industrial is currently generating about 0.08 per unit of risk. If you would invest  39,152  in Migdal Insurance on December 1, 2024 and sell it today you would earn a total of  35,148  from holding Migdal Insurance or generate 89.77% return on investment over 90 days.

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

Migdal Insurance  vs.  Hiron Trade Investments Indust

Migdal Insurance

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Migdal Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Migdal Insurance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Hiron Trade Investments

Risk-Adjusted Performance

Good

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

Pair Trading with Migdal Insurance and Hiron Trade

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

The idea behind Migdal Insurance and Hiron Trade Investments Industrial 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.