Correlation Between Migdal Insurance and Terminal X

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

By analyzing existing cross correlation between Migdal Insurance and Terminal X Online, you can compare the effects of market volatilities on Migdal Insurance and Terminal X 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 Terminal X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Migdal Insurance and Terminal X.

Diversification Opportunities for Migdal Insurance and Terminal X

0.86

Correlation Coefficient

Migdal Insurance  Terminal X

Very poor diversification

The 3 months correlation between Migdal and Terminal is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Terminal X Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terminal X Online 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 Terminal X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terminal X Online has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Terminal X go up and down completely randomly.

Pair Corralation between Migdal Insurance and Terminal X

Assuming the 90 days trading horizon Migdal Insurance is expected to generate 1.48 times more return on investment than Terminal X. However, Migdal Insurance is 1.48 times more volatile than Terminal X Online. It trades about 0.37 of its potential returns per unit of risk. Terminal X Online is currently generating about 0.11 per unit of risk. If you would invest  68,800  in Migdal Insurance on April 24, 2025 and sell it today you would earn a total of  33,100  from holding Migdal Insurance or generate 48.11% return on investment over 90 days.

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

Migdal Insurance  vs.  Terminal X Online

Migdal Insurance

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Migdal Insurance are ranked lower than 28 (%) 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.

Terminal X Online

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Terminal X Online are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Terminal X may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Migdal Insurance and Terminal X

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

The idea behind Migdal Insurance and Terminal X Online 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.