Correlation Between Bank of East and Bank Hapoalim
Can any of the company-specific risk be diversified away by investing in both Bank of East and Bank Hapoalim 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 Bank of East and Bank Hapoalim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of East and Bank Hapoalim ADR, you can compare the effects of market volatilities on Bank of East and Bank Hapoalim 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 Bank of East with a short position of Bank Hapoalim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of East and Bank Hapoalim.
Diversification Opportunities for Bank of East and Bank Hapoalim
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Bank is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bank of East and Bank Hapoalim ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Hapoalim ADR and Bank of East 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 Bank of East are associated (or correlated) with Bank Hapoalim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Hapoalim ADR has no effect on the direction of Bank of East i.e., Bank of East and Bank Hapoalim go up and down completely randomly.
Pair Corralation between Bank of East and Bank Hapoalim
Assuming the 90 days horizon Bank of East is expected to under-perform the Bank Hapoalim. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank of East is 2.28 times less risky than Bank Hapoalim. The pink sheet trades about -0.19 of its potential returns per unit of risk. The Bank Hapoalim ADR is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,877 in Bank Hapoalim ADR on September 1, 2024 and sell it today you would earn a total of 936.00 from holding Bank Hapoalim ADR or generate 19.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of East vs. Bank Hapoalim ADR
Performance |
| Timeline |
| Bank of East |
| Bank Hapoalim ADR |
Bank of East and Bank Hapoalim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of East and Bank Hapoalim
The main advantage of trading using opposite Bank of East and Bank Hapoalim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of East position performs unexpectedly, Bank Hapoalim 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 Bank Hapoalim will offset losses from the drop in Bank Hapoalim's long position.| Bank of East vs. Piraeus Bank SA | Bank of East vs. Turkiye Garanti Bankasi | Bank of East vs. Delhi Bank Corp | Bank of East vs. Uwharrie Capital Corp |
| Bank Hapoalim vs. Piraeus Bank SA | Bank Hapoalim vs. Turkiye Garanti Bankasi | Bank Hapoalim vs. Delhi Bank Corp | Bank Hapoalim vs. Uwharrie Capital Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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