Correlation Between Migdal Insurance and Rapac Communication

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

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

Diversification Opportunities for Migdal Insurance and Rapac Communication

0.78

Correlation Coefficient

Migdal Insurance  Rapac Communication

Poor diversification

The 3 months correlation between Migdal and Rapac is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Rapac Communication Infrastruc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rapac Communication 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 Rapac Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rapac Communication has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Rapac Communication go up and down completely randomly.

Pair Corralation between Migdal Insurance and Rapac Communication

Assuming the 90 days trading horizon Migdal Insurance is expected to generate 15.76 times less return on investment than Rapac Communication. But when comparing it to its historical volatility, Migdal Insurance is 1.01 times less risky than Rapac Communication. It trades about 0.02 of its potential returns per unit of risk. Rapac Communication Infrastructure is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  278,500  in Rapac Communication Infrastructure on December 30, 2024 and sell it today you would earn a total of  89,000  from holding Rapac Communication Infrastructure or generate 31.96% 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.  Rapac Communication Infrastruc

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.

Rapac Communication

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rapac Communication Infrastructure are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rapac Communication sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Migdal Insurance and Rapac Communication

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

The idea behind Migdal Insurance and Rapac Communication Infrastructure 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.