Correlation Between Bank Leumi and Allot Communications
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Allot Communications 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 Allot Communications 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 Allot Communications, you can compare the effects of market volatilities on Bank Leumi and Allot Communications 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 Allot Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Allot Communications.
Diversification Opportunities for Bank Leumi and Allot Communications
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Allot is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Allot Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allot Communications 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 Allot Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allot Communications has no effect on the direction of Bank Leumi i.e., Bank Leumi and Allot Communications go up and down completely randomly.
Pair Corralation between Bank Leumi and Allot Communications
Assuming the 90 days trading horizon Bank Leumi is expected to generate 2.76 times less return on investment than Allot Communications. But when comparing it to its historical volatility, Bank Leumi Le Israel is 4.81 times less risky than Allot Communications. It trades about 0.41 of its potential returns per unit of risk. Allot Communications is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 128,900 in Allot Communications on September 3, 2024 and sell it today you would earn a total of 31,500 from holding Allot Communications or generate 24.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Leumi Le Israel vs. Allot Communications
Performance |
| Timeline |
| Bank Leumi Le |
| Allot Communications |
Bank Leumi and Allot Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and Allot Communications
The main advantage of trading using opposite Bank Leumi and Allot Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, Allot Communications 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 Allot Communications will offset losses from the drop in Allot Communications' long position.| Bank Leumi vs. Bank Hapoalim | Bank Leumi vs. Israel Discount Bank | Bank Leumi vs. First International Bank | Bank Leumi vs. Elbit Systems |
| Allot Communications vs. Tower Semiconductor | Allot Communications vs. Nova | Allot Communications vs. Nice | Allot Communications 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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