Correlation Between Bank Leumi and Abra Information
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Abra Information 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 Leumi and Abra Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Leumi Le Israel and Abra Information Technologies, you can compare the effects of market volatilities on Bank Leumi and Abra Information 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 Leumi with a short position of Abra Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Abra Information.
Diversification Opportunities for Bank Leumi and Abra Information
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Abra is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Abra Information Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abra Information Tec and Bank Leumi 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 Leumi Le Israel are associated (or correlated) with Abra Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abra Information Tec has no effect on the direction of Bank Leumi i.e., Bank Leumi and Abra Information go up and down completely randomly.
Pair Corralation between Bank Leumi and Abra Information
Assuming the 90 days trading horizon Bank Leumi Le Israel is expected to generate 0.51 times more return on investment than Abra Information. However, Bank Leumi Le Israel is 1.95 times less risky than Abra Information. It trades about 0.78 of its potential returns per unit of risk. Abra Information Technologies is currently generating about -0.44 per unit of risk. If you would invest 371,500 in Bank Leumi Le Israel on August 29, 2024 and sell it today you would earn a total of 57,600 from holding Bank Leumi Le Israel or generate 15.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Leumi Le Israel vs. Abra Information Technologies
Performance |
| Timeline |
| Bank Leumi Le |
| Abra Information Tec |
Bank Leumi and Abra Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and Abra Information
The main advantage of trading using opposite Bank Leumi and Abra Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, Abra Information 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 Abra Information will offset losses from the drop in Abra Information's long position.| Bank Leumi vs. Bank Hapoalim | Bank Leumi vs. Israel Discount Bank | Bank Leumi vs. Mizrahi Tefahot | Bank Leumi vs. Bezeq Israeli Telecommunication |
| Abra Information vs. Seach Medical Group | Abra Information vs. B Communications | Abra Information vs. Migdal Insurance | Abra Information vs. Amanet Management Systems |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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