Correlation Between Payment Financial and Migdal Insurance

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

By analyzing existing cross correlation between Payment Financial Technologies and Migdal Insurance, you can compare the effects of market volatilities on Payment Financial and Migdal Insurance 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 Payment Financial with a short position of Migdal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payment Financial and Migdal Insurance.

Diversification Opportunities for Payment Financial and Migdal Insurance

0.85

Correlation Coefficient

Payment Financial  Migdal Insurance

Very poor diversification

The 3 months correlation between Payment and Migdal is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Payment Financial Technologies and Migdal Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Migdal Insurance and Payment Financial 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 Payment Financial Technologies are associated (or correlated) with Migdal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Migdal Insurance has no effect on the direction of Payment Financial i.e., Payment Financial and Migdal Insurance go up and down completely randomly.

Pair Corralation between Payment Financial and Migdal Insurance

Assuming the 90 days trading horizon Payment Financial Technologies is expected to under-perform the Migdal Insurance. In addition to that, Payment Financial is 2.54 times more volatile than Migdal Insurance. It trades about -0.12 of its total potential returns per unit of risk. Migdal Insurance is currently generating about 0.03 per unit of volatility. If you would invest  73,980  in Migdal Insurance on December 4, 2024 and sell it today you would earn a total of  410.00  from holding Migdal Insurance or generate 0.55% return on investment over 90 days.

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

Payment Financial Technologies  vs.  Migdal Insurance

Payment Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Payment Financial Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Payment Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Migdal Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Migdal Insurance are ranked lower than 10 (%) 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.

Pair Trading with Payment Financial and Migdal Insurance

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

The idea behind Payment Financial Technologies and Migdal Insurance 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.