Correlation Between Israel Discount and Hamama
Can any of the company-specific risk be diversified away by investing in both Israel Discount and Hamama 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 Israel Discount and Hamama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Discount Bank and Hamama, you can compare the effects of market volatilities on Israel Discount and Hamama 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 Israel Discount with a short position of Hamama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and Hamama.
Diversification Opportunities for Israel Discount and Hamama
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Israel and Hamama is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and Hamama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamama and Israel Discount 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 Israel Discount Bank are associated (or correlated) with Hamama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamama has no effect on the direction of Israel Discount i.e., Israel Discount and Hamama go up and down completely randomly.
Pair Corralation between Israel Discount and Hamama
Assuming the 90 days trading horizon Israel Discount Bank is expected to generate 0.71 times more return on investment than Hamama. However, Israel Discount Bank is 1.42 times less risky than Hamama. It trades about 0.26 of its potential returns per unit of risk. Hamama is currently generating about -0.06 per unit of risk. If you would invest 197,947 in Israel Discount Bank on September 3, 2024 and sell it today you would earn a total of 40,653 from holding Israel Discount Bank or generate 20.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Discount Bank vs. Hamama
Performance |
| Timeline |
| Israel Discount Bank |
| Hamama |
Israel Discount and Hamama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and Hamama
The main advantage of trading using opposite Israel Discount and Hamama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, Hamama 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 Hamama will offset losses from the drop in Hamama's long position.| Israel Discount vs. Bank Leumi Le Israel | Israel Discount vs. Bank Hapoalim | Israel Discount vs. Mizrahi Tefahot | Israel Discount vs. Bezeq Israeli Telecommunication |
| Hamama vs. Israel Discount Bank | Hamama vs. Azorim Investment Development | Hamama vs. Automatic Bank Services | Hamama vs. Aura Investments |
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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