Correlation Between Bank Leumi and G City
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and G City 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 G City 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 G City, you can compare the effects of market volatilities on Bank Leumi and G City 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 G City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and G City.
Diversification Opportunities for Bank Leumi and G City
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and GCT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and G City in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G City 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 G City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G City has no effect on the direction of Bank Leumi i.e., Bank Leumi and G City go up and down completely randomly.
Pair Corralation between Bank Leumi and G City
Assuming the 90 days trading horizon Bank Leumi Le Israel is expected to generate 0.55 times more return on investment than G City. However, Bank Leumi Le Israel is 1.82 times less risky than G City. It trades about 0.06 of its potential returns per unit of risk. G City is currently generating about 0.02 per unit of risk. If you would invest 281,856 in Bank Leumi Le Israel on September 3, 2024 and sell it today you would earn a total of 131,144 from holding Bank Leumi Le Israel or generate 46.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Leumi Le Israel vs. G City
Performance |
| Timeline |
| Bank Leumi Le |
| G City |
Bank Leumi and G City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and G City
The main advantage of trading using opposite Bank Leumi and G City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, G City 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 G City will offset losses from the drop in G City's long position.| Bank Leumi vs. Bank Hapoalim | Bank Leumi vs. Israel Discount Bank | Bank Leumi vs. First International Bank | Bank Leumi vs. Elbit Systems |
| G City vs. TAT Technologies | G City vs. Technoplus Ventures | G City vs. Unicorn Technologies | G City vs. Clal Insurance Enterprises |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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