Correlation Between Migdal Insurance and Utron

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

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

Diversification Opportunities for Migdal Insurance and Utron

-0.74

Correlation Coefficient

Migdal Insurance  Utron

Pay attention - limited upside

The 3 months correlation between Migdal and Utron is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Insurance and Utron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utron 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 Utron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utron has no effect on the direction of Migdal Insurance i.e., Migdal Insurance and Utron go up and down completely randomly.

Pair Corralation between Migdal Insurance and Utron

Assuming the 90 days trading horizon Migdal Insurance is expected to generate 0.83 times more return on investment than Utron. However, Migdal Insurance is 1.2 times less risky than Utron. It trades about 0.4 of its potential returns per unit of risk. Utron is currently generating about -0.28 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  40,400  from holding Migdal Insurance or generate 58.72% return on investment over 90 days.

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

Migdal Insurance  vs.  Utron

Migdal Insurance

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Migdal Insurance are ranked lower than 31 (%) 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.

Utron

Risk-Adjusted Performance

Very Weak

Over the last 90 days Utron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Migdal Insurance and Utron

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

The idea behind Migdal Insurance and Utron 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.