Correlation Between Bank Rakyat and Bank Hapoalim
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat 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 Rakyat 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 Rakyat and Bank Hapoalim ADR, you can compare the effects of market volatilities on Bank Rakyat 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 Rakyat with a short position of Bank Hapoalim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Bank Hapoalim.
Diversification Opportunities for Bank Rakyat and Bank Hapoalim
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Bank is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat 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 Rakyat 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 Rakyat 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 Rakyat i.e., Bank Rakyat and Bank Hapoalim go up and down completely randomly.
Pair Corralation between Bank Rakyat and Bank Hapoalim
Assuming the 90 days horizon Bank Rakyat is expected to generate 8.07 times less return on investment than Bank Hapoalim. But when comparing it to its historical volatility, Bank Rakyat is 1.47 times less risky than Bank Hapoalim. It trades about 0.01 of its potential returns per unit of risk. Bank Hapoalim ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,229 in Bank Hapoalim ADR on August 30, 2024 and sell it today you would earn a total of 1,621 from holding Bank Hapoalim ADR or generate 38.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 93.13% |
| Values | Daily Returns |
Bank Rakyat vs. Bank Hapoalim ADR
Performance |
| Timeline |
| Bank Rakyat |
| Bank Hapoalim ADR |
Bank Rakyat and Bank Hapoalim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Bank Hapoalim
The main advantage of trading using opposite Bank Rakyat and Bank Hapoalim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat 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 Rakyat vs. Israel Discount Bank | Bank Rakyat vs. Baraboo Bancorporation | Bank Rakyat vs. Danske Bank AS | Bank Rakyat vs. Jyske Bank AS |
| Bank Hapoalim vs. Israel Discount Bank | Bank Hapoalim vs. Baraboo Bancorporation | Bank Hapoalim vs. Schweizerische Nationalbank | Bank Hapoalim vs. Danske Bank AS |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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