Correlation Between MeguREIT Israel and Clal Insurance
Can any of the company-specific risk be diversified away by investing in both MeguREIT Israel and Clal 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 MeguREIT Israel and Clal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MeguREIT Israel and Clal Insurance Enterprises, you can compare the effects of market volatilities on MeguREIT Israel and Clal 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 MeguREIT Israel with a short position of Clal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of MeguREIT Israel and Clal Insurance.
Diversification Opportunities for MeguREIT Israel and Clal Insurance
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MeguREIT and Clal is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding MeguREIT Israel and Clal Insurance Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Insurance Enter and MeguREIT Israel 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 MeguREIT Israel are associated (or correlated) with Clal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Insurance Enter has no effect on the direction of MeguREIT Israel i.e., MeguREIT Israel and Clal Insurance go up and down completely randomly.
Pair Corralation between MeguREIT Israel and Clal Insurance
Assuming the 90 days trading horizon MeguREIT Israel is expected to generate 1.76 times more return on investment than Clal Insurance. However, MeguREIT Israel is 1.76 times more volatile than Clal Insurance Enterprises. It trades about 0.06 of its potential returns per unit of risk. Clal Insurance Enterprises is currently generating about 0.09 per unit of risk. If you would invest 40,430 in MeguREIT Israel on January 20, 2024 and sell it today you would earn a total of 2,840 from holding MeguREIT Israel or generate 7.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MeguREIT Israel vs. Clal Insurance Enterprises
Performance |
| Timeline |
| MeguREIT Israel |
| Clal Insurance Enter |
MeguREIT Israel and Clal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MeguREIT Israel and Clal Insurance
The main advantage of trading using opposite MeguREIT Israel and Clal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MeguREIT Israel position performs unexpectedly, Clal 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 Clal Insurance will offset losses from the drop in Clal Insurance's long position.| MeguREIT Israel vs. Nice | MeguREIT Israel vs. Bank Leumi Le Israel | MeguREIT Israel vs. ICL Israel Chemicals | MeguREIT Israel vs. Mizrahi Tefahot |
| Clal Insurance vs. Rani Zim Shopping | Clal Insurance vs. Accel Solutions Group | Clal Insurance vs. Rapac Communication Infrastructure |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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