Correlation Between Harel Insurance and Menif Financial

Can any of the company-specific risk be diversified away by investing in both Harel Insurance and Menif Financial 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 Menif Financial 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 Menif Financial Services, you can compare the effects of market volatilities on Harel Insurance and Menif Financial 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 Menif Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harel Insurance and Menif Financial.

Diversification Opportunities for Harel Insurance and Menif Financial

0.84

Correlation Coefficient

Harel Insurance  Menif Financial

Very poor diversification

The 3 months correlation between Harel and Menif is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Harel Insurance Investments and Menif Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Menif Financial Services 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 Menif Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Menif Financial Services has no effect on the direction of Harel Insurance i.e., Harel Insurance and Menif Financial go up and down completely randomly.

Pair Corralation between Harel Insurance and Menif Financial

Assuming the 90 days trading horizon Harel Insurance is expected to generate 1.18 times less return on investment than Menif Financial. In addition to that, Harel Insurance is 1.14 times more volatile than Menif Financial Services. It trades about 0.09 of its total potential returns per unit of risk. Menif Financial Services is currently generating about 0.13 per unit of volatility. If you would invest  86,798  in Menif Financial Services on September 12, 2024 and sell it today you would earn a total of  76,702  from holding Menif Financial Services or generate 88.37% return on investment over 90 days.

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

Harel Insurance Investments  vs.  Menif Financial Services

Harel Insurance Inve

Risk-Adjusted Performance

30 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Harel Insurance Investments are ranked lower than 30 (%) 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.

Menif Financial Services

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Menif Financial Services are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Menif Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harel Insurance and Menif Financial

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

The idea behind Harel Insurance Investments and Menif Financial Services 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.