Correlation Between Microsoft and Migdal Insurance

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Migdal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Migdal Insurance, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Migdal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Migdal Insurance.

Diversification Opportunities for Microsoft and Migdal Insurance

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Microsoft and Migdal is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Migdal Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Migdal Insurance and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Migdal Insurance go up and down completely randomly.

Pair Corralation between Microsoft and Migdal Insurance

Given the investment horizon of 90 days Microsoft is expected to generate 4.93 times less return on investment than Migdal Insurance. But when comparing it to its historical volatility, Microsoft is 1.76 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 0.32 of returns per unit of risk over similar time horizon. If you would invest  45,290  in Migdal Insurance on December 29, 2023 and sell it today you would earn a total of  5,720  from holding Migdal Insurance or generate 12.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy73.91%
ValuesDaily Returns

Microsoft  vs.  Migdal Insurance

 Performance 
       Timeline  
Microsoft 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Migdal Insurance 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Migdal Insurance are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Migdal Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Microsoft and Migdal Insurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microsoft and Migdal Insurance

The main advantage of trading using opposite Microsoft and Migdal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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 Microsoft 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.
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 Transaction History module to view history of all your transactions and understand their impact on performance.

Other Complementary Tools

Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Stocks Directory
Find actively traded stocks across global markets
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios