Correlation Between Harel Insurance and Capital Point

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

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

Diversification Opportunities for Harel Insurance and Capital Point

0.64

Correlation Coefficient

Harel Insurance  Capital Point

Poor diversification

The 3 months correlation between Harel and Capital is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Harel Insurance Investments and Capital Point in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Point and Harel 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 Harel Insurance Investments are associated (or correlated) with Capital Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Point has no effect on the direction of Harel Insurance i.e., Harel Insurance and Capital Point go up and down completely randomly.

Pair Corralation between Harel Insurance and Capital Point

Assuming the 90 days trading horizon Harel Insurance Investments is expected to generate 1.05 times more return on investment than Capital Point. However, Harel Insurance is 1.05 times more volatile than Capital Point. It trades about 0.48 of its potential returns per unit of risk. Capital Point is currently generating about 0.25 per unit of risk. If you would invest  338,400  in Harel Insurance Investments on September 25, 2024 and sell it today you would earn a total of  177,000  from holding Harel Insurance Investments or generate 52.3% return on investment over 90 days.

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

Harel Insurance Investments  vs.  Capital Point

Harel Insurance Inve

Risk-Adjusted Performance

37 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Harel Insurance Investments are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harel Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Capital Point

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Point are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Capital Point sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harel Insurance and Capital Point

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

The idea behind Harel Insurance Investments and Capital Point 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.