Correlation Between Harel Sal and Harel Index

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

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

Diversification Opportunities for Harel Sal and Harel Index

0.91

Correlation Coefficient

Harel Sal  Harel Index

Almost no diversification

The 3 months correlation between Harel and Harel is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Harel Sal SP and Harel Index Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harel Index Funds and Harel Sal 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 Sal SP are associated (or correlated) with Harel Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harel Index Funds has no effect on the direction of Harel Sal i.e., Harel Sal and Harel Index go up and down completely randomly.

Pair Corralation between Harel Sal and Harel Index

Assuming the 90 days trading horizon Harel Sal is expected to generate 1.52 times less return on investment than Harel Index. But when comparing it to its historical volatility, Harel Sal SP is 1.69 times less risky than Harel Index. It trades about 0.22 of its potential returns per unit of risk. Harel Index Funds is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  51,950  in Harel Index Funds on September 15, 2024 and sell it today you would earn a total of  5,820  from holding Harel Index Funds or generate 11.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.87%
Values	Daily Returns

Harel Sal SP  vs.  Harel Index Funds

Harel Sal SP

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Harel Sal SP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harel Sal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Harel Index Funds

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harel Index Funds are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harel Index sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harel Sal and Harel Index

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

The idea behind Harel Sal SP and Harel Index Funds 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.

Check out your portfolio center.

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.