Correlation Between Migdal Insurance and Israel China

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

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

Diversification Opportunities for Migdal Insurance and Israel China

-0.53

Correlation Coefficient

Migdal Insurance  Israel China

Excellent diversification

The 3 months correlation between Migdal and Israel is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Israel China Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel China Biotech 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 Israel China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel China Biotech has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Israel China go up and down completely randomly.

Pair Corralation between Migdal Insurance and Israel China

Assuming the 90 days trading horizon Migdal Insurance is expected to generate 0.2 times more return on investment than Israel China. However, Migdal Insurance is 4.88 times less risky than Israel China. It trades about 0.15 of its potential returns per unit of risk. Israel China Biotechnology is currently generating about -0.01 per unit of risk. If you would invest  67,315  in Migdal Insurance on December 1, 2024 and sell it today you would earn a total of  6,985  from holding Migdal Insurance or generate 10.38% 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.  Israel China Biotechnology

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.

Israel China Biotech

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Migdal Insurance and Israel China

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

The idea behind Migdal Insurance and Israel China Biotechnology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.