Correlation Between Baran and Harel Insurance

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

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

Diversification Opportunities for Baran and Harel Insurance

0.92

Correlation Coefficient

Baran  Harel Insurance

Almost no diversification

The 3 months correlation between Baran and Harel is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Baran Group and Harel Insurance Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harel Insurance Inve and Baran 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 Baran Group are associated (or correlated) with Harel Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harel Insurance Inve has no effect on the direction of Baran i.e., Baran and Harel Insurance go up and down completely randomly.

Pair Corralation between Baran and Harel Insurance

Assuming the 90 days trading horizon Baran Group is expected to under-perform the Harel Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Baran Group is 1.32 times less risky than Harel Insurance. The stock trades about -0.08 of its potential returns per unit of risk. The Harel Insurance Investments is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  344,601  in Harel Insurance Investments on February 1, 2024 and sell it today you would lose (1,301) from holding Harel Insurance Investments or give up 0.38% of portfolio value over 90 days.

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

Baran Group  vs.  Harel Insurance Investments

Baran Group

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Baran Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Baran sustained solid returns over the last few months and may actually be approaching a breakup point.

Harel Insurance Inve

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Harel Insurance Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Harel Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baran and Harel Insurance

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

The idea behind Baran Group and Harel Insurance Investments 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.