Correlation Between Bank Leumi and Gan Shmuel
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Gan Shmuel 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 Gan Shmuel 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 Gan Shmuel, you can compare the effects of market volatilities on Bank Leumi and Gan Shmuel 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 Gan Shmuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Gan Shmuel.
Diversification Opportunities for Bank Leumi and Gan Shmuel
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Gan is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Gan Shmuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan Shmuel 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 Gan Shmuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan Shmuel has no effect on the direction of Bank Leumi i.e., Bank Leumi and Gan Shmuel go up and down completely randomly.
Pair Corralation between Bank Leumi and Gan Shmuel
Assuming the 90 days trading horizon Bank Leumi is expected to generate 2.73 times less return on investment than Gan Shmuel. But when comparing it to its historical volatility, Bank Leumi Le Israel is 1.25 times less risky than Gan Shmuel. It trades about 0.07 of its potential returns per unit of risk. Gan Shmuel is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 119,299 in Gan Shmuel on September 3, 2024 and sell it today you would earn a total of 272,701 from holding Gan Shmuel or generate 228.59% 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. Gan Shmuel
Performance |
| Timeline |
| Bank Leumi Le |
| Gan Shmuel |
Bank Leumi and Gan Shmuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and Gan Shmuel
The main advantage of trading using opposite Bank Leumi and Gan Shmuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, Gan Shmuel 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 Gan Shmuel will offset losses from the drop in Gan Shmuel'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 |
| Gan Shmuel vs. Shufersal | Gan Shmuel vs. Rami Levi | Gan Shmuel vs. Tiv Taam | Gan Shmuel vs. M Yochananof and |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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