Correlation Between Migdal Insurance and Millennium Food

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

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

Diversification Opportunities for Migdal Insurance and Millennium Food

-0.49

Correlation Coefficient

Migdal Insurance  Millennium Food

Very good diversification

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

Pair Corralation between Migdal Insurance and Millennium Food

Assuming the 90 days trading horizon Migdal Insurance is expected to generate 0.56 times more return on investment than Millennium Food. However, Migdal Insurance is 1.78 times less risky than Millennium Food. It trades about 0.42 of its potential returns per unit of risk. Millennium Food Tech LP is currently generating about -0.13 per unit of risk. If you would invest  46,000  in Migdal Insurance on August 30, 2024 and sell it today you would earn a total of  17,320  from holding Migdal Insurance or generate 37.65% 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.  Millennium Food Tech LP

Migdal Insurance

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Migdal Insurance are ranked lower than 33 (%) 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.

Millennium Food Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Millennium Food Tech LP 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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Migdal Insurance and Millennium Food

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

The idea behind Migdal Insurance and Millennium Food Tech LP 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.