Correlation Between Bank Leumi and Amot Investments
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Amot Investments 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 Amot Investments 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 Amot Investments, you can compare the effects of market volatilities on Bank Leumi and Amot Investments 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 Amot Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Amot Investments.
Diversification Opportunities for Bank Leumi and Amot Investments
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Amot is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Amot Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amot Investments 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 Amot Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amot Investments has no effect on the direction of Bank Leumi i.e., Bank Leumi and Amot Investments go up and down completely randomly.
Pair Corralation between Bank Leumi and Amot Investments
Assuming the 90 days trading horizon Bank Leumi is expected to generate 1.47 times less return on investment than Amot Investments. But when comparing it to its historical volatility, Bank Leumi Le Israel is 1.43 times less risky than Amot Investments. It trades about 0.64 of its potential returns per unit of risk. Amot Investments is currently generating about 0.65 of returns per unit of risk over similar time horizon. If you would invest 167,500 in Amot Investments on August 24, 2024 and sell it today you would earn a total of 28,500 from holding Amot Investments or generate 17.01% 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. Amot Investments
Performance |
| Timeline |
| Bank Leumi Le |
| Amot Investments |
Bank Leumi and Amot Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and Amot Investments
The main advantage of trading using opposite Bank Leumi and Amot Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, Amot Investments 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 Amot Investments will offset losses from the drop in Amot Investments' long position.| Bank Leumi vs. Bank Hapoalim | Bank Leumi vs. Israel Discount Bank | Bank Leumi vs. Mizrahi Tefahot | Bank Leumi vs. Bezeq Israeli Telecommunication |
| Amot Investments vs. Alony Hetz Properties | Amot Investments vs. Azrieli Group | Amot Investments vs. Melisron | Amot Investments vs. Bank Leumi Le Israel |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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