Correlation Between ICL Israel and Bank Leumi
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Bank Leumi 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 ICL Israel and Bank Leumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICL Israel Chemicals and Bank Leumi Le Israel, you can compare the effects of market volatilities on ICL Israel and Bank Leumi 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 ICL Israel with a short position of Bank Leumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Bank Leumi.
Diversification Opportunities for ICL Israel and Bank Leumi
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ICL and Bank is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Bank Leumi Le Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Leumi Le and ICL Israel 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 ICL Israel Chemicals are associated (or correlated) with Bank Leumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Leumi Le has no effect on the direction of ICL Israel i.e., ICL Israel and Bank Leumi go up and down completely randomly.
Pair Corralation between ICL Israel and Bank Leumi
Assuming the 90 days trading horizon ICL Israel is expected to generate 4.55 times less return on investment than Bank Leumi. In addition to that, ICL Israel is 1.66 times more volatile than Bank Leumi Le Israel. It trades about 0.04 of its total potential returns per unit of risk. Bank Leumi Le Israel is currently generating about 0.3 per unit of volatility. If you would invest 349,200 in Bank Leumi Le Israel on August 29, 2024 and sell it today you would earn a total of 79,900 from holding Bank Leumi Le Israel or generate 22.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICL Israel Chemicals vs. Bank Leumi Le Israel
Performance |
| Timeline |
| ICL Israel Chemicals |
| Bank Leumi Le |
ICL Israel and Bank Leumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and Bank Leumi
The main advantage of trading using opposite ICL Israel and Bank Leumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Bank Leumi 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 Leumi will offset losses from the drop in Bank Leumi's long position.| ICL Israel vs. Elbit Systems | ICL Israel vs. Bezeq Israeli Telecommunication | ICL Israel vs. Teva Pharmaceutical Industries | ICL Israel vs. Bank Leumi Le Israel |
| Bank Leumi vs. Elbit Systems | Bank Leumi vs. Discount Investment Corp | Bank Leumi vs. Clal Insurance Enterprises | Bank Leumi vs. AudioCodes |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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