Correlation Between Teuza A and Migdal Insurance

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

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

Diversification Opportunities for Teuza A and Migdal Insurance

0.58

Correlation Coefficient

Teuza A  Migdal Insurance

Very weak diversification

The 3 months correlation between Teuza and Migdal is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Teuza A Fairchild and Migdal Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Migdal Insurance and Teuza A 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 Teuza A Fairchild 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 Teuza A i.e., Teuza A and Migdal Insurance go up and down completely randomly.

Pair Corralation between Teuza A and Migdal Insurance

Assuming the 90 days trading horizon Teuza A Fairchild is expected to generate 0.89 times more return on investment than Migdal Insurance. However, Teuza A Fairchild is 1.12 times less risky than Migdal Insurance. It trades about 0.11 of its potential returns per unit of risk. Migdal Insurance is currently generating about 0.02 per unit of risk. If you would invest  3,950  in Teuza A Fairchild on December 30, 2024 and sell it today you would earn a total of  410.00  from holding Teuza A Fairchild or generate 10.38% return on investment over 90 days.

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

Teuza A Fairchild  vs.  Migdal Insurance

Teuza A Fairchild

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teuza A Fairchild are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Teuza A sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Teuza A and Migdal Insurance

The main advantage of trading using opposite Teuza A and Migdal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teuza A 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 Teuza A Fairchild 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .