Correlation Between Migdal Insurance and Raval ACS

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

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

Diversification Opportunities for Migdal Insurance and Raval ACS

-0.28

Correlation Coefficient

Migdal Insurance  Raval ACS

Very good diversification

The 3 months correlation between Migdal and Raval is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Raval ACS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raval ACS 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 Raval ACS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raval ACS has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Raval ACS go up and down completely randomly.

Pair Corralation between Migdal Insurance and Raval ACS

Assuming the 90 days trading horizon Migdal Insurance is expected to generate 0.83 times more return on investment than Raval ACS. However, Migdal Insurance is 1.21 times less risky than Raval ACS. It trades about 0.02 of its potential returns per unit of risk. Raval ACS is currently generating about -0.08 per unit of risk. If you would invest  67,560  in Migdal Insurance on December 29, 2024 and sell it today you would earn a total of  380.00  from holding Migdal Insurance or generate 0.56% return on investment over 90 days.

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

Migdal Insurance  vs.  Raval ACS

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.

Raval ACS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Raval ACS 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 essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Migdal Insurance and Raval ACS

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

The idea behind Migdal Insurance and Raval ACS 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.