Correlation Between Clal Insurance and El Al

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

By analyzing existing cross correlation between Clal Insurance Enterprises and El Al Israel, you can compare the effects of market volatilities on Clal Insurance and El Al 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 Clal Insurance with a short position of El Al. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and El Al.

Diversification Opportunities for Clal Insurance and El Al

-0.44

Correlation Coefficient

Clal Insurance  El Al

Very good diversification

The 3 months correlation between Clal and ELAL is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and El Al Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Al Israel and Clal 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 Clal Insurance Enterprises are associated (or correlated) with El Al. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Al Israel has no effect on the direction of Clal Insurance i.e., Clal Insurance and El Al go up and down completely randomly.

Pair Corralation between Clal Insurance and El Al

Assuming the 90 days trading horizon Clal Insurance Enterprises is expected to under-perform the El Al. But the stock apears to be less risky and, when comparing its historical volatility, Clal Insurance Enterprises is 1.56 times less risky than El Al. The stock trades about -0.12 of its potential returns per unit of risk. The El Al Israel is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  50,900  in El Al Israel on February 22, 2024 and sell it today you would earn a total of  1,490  from holding El Al Israel or generate 2.93% return on investment over 90 days.

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

Clal Insurance Enterprises  vs.  El Al Israel

Clal Insurance Enter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clal Insurance Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Clal Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

El Al Israel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in El Al Israel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, El Al sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clal Insurance and El Al

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

The idea behind Clal Insurance Enterprises and El Al Israel 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.