Correlation Between Migdal Insurance and Emilia Devel

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

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

Diversification Opportunities for Migdal Insurance and Emilia Devel

0.59

Correlation Coefficient

Migdal Insurance  Emilia Devel

Very weak diversification

The 3 months correlation between Migdal and Emilia is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Emilia Devel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emilia Devel and Migdal 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 Migdal Insurance are associated (or correlated) with Emilia Devel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emilia Devel has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Emilia Devel go up and down completely randomly.

Pair Corralation between Migdal Insurance and Emilia Devel

Assuming the 90 days trading horizon Migdal Insurance is expected to under-perform the Emilia Devel. But the stock apears to be less risky and, when comparing its historical volatility, Migdal Insurance is 1.03 times less risky than Emilia Devel. The stock trades about -0.26 of its potential returns per unit of risk. The Emilia Devel is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  249,900  in Emilia Devel on January 30, 2024 and sell it today you would lose (19,900) from holding Emilia Devel or give up 7.96% of portfolio value over 90 days.

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

Migdal Insurance  vs.  Emilia Devel

Migdal Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Migdal Insurance are ranked lower than 11 (%) 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.

Emilia Devel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Emilia Devel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Emilia Devel may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Migdal Insurance and Emilia Devel

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

The idea behind Migdal Insurance and Emilia Devel 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.