Correlation Between IDI Insurance and Phoenix Holdings
Can any of the company-specific risk be diversified away by investing in both IDI Insurance and Phoenix Holdings 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 IDI Insurance and Phoenix Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDI Insurance and The Phoenix Holdings, you can compare the effects of market volatilities on IDI Insurance and Phoenix Holdings 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 IDI Insurance with a short position of Phoenix Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDI Insurance and Phoenix Holdings.
Diversification Opportunities for IDI Insurance and Phoenix Holdings
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between IDI and Phoenix is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding IDI Insurance and The Phoenix Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Holdings and IDI 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 IDI Insurance are associated (or correlated) with Phoenix Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Holdings has no effect on the direction of IDI Insurance i.e., IDI Insurance and Phoenix Holdings go up and down completely randomly.
Pair Corralation between IDI Insurance and Phoenix Holdings
Assuming the 90 days trading horizon IDI Insurance is expected to generate 0.84 times more return on investment than Phoenix Holdings. However, IDI Insurance is 1.19 times less risky than Phoenix Holdings. It trades about -0.04 of its potential returns per unit of risk. The Phoenix Holdings is currently generating about -0.05 per unit of risk. If you would invest 1,061,757 in IDI Insurance on January 25, 2024 and sell it today you would lose (20,757) from holding IDI Insurance or give up 1.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IDI Insurance vs. The Phoenix Holdings
Performance |
| Timeline |
| IDI Insurance |
| Phoenix Holdings |
IDI Insurance and Phoenix Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDI Insurance and Phoenix Holdings
The main advantage of trading using opposite IDI Insurance and Phoenix Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDI Insurance position performs unexpectedly, Phoenix Holdings 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 Phoenix Holdings will offset losses from the drop in Phoenix Holdings' long position.The idea behind IDI Insurance and The Phoenix Holdings 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.| Phoenix Holdings vs. Harel Insurance Investments | Phoenix Holdings vs. Migdal Insurance | Phoenix Holdings vs. Menora Miv Hld | Phoenix Holdings vs. Israel Discount Bank |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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