Correlation Between Bank Leumi and Harel Insurance
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Harel Insurance 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 Harel Insurance 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 Harel Insurance Investments, you can compare the effects of market volatilities on Bank Leumi and Harel Insurance 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 Harel Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Harel Insurance.
Diversification Opportunities for Bank Leumi and Harel Insurance
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Harel is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Harel Insurance Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harel Insurance Inve 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 Harel Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harel Insurance Inve has no effect on the direction of Bank Leumi i.e., Bank Leumi and Harel Insurance go up and down completely randomly.
Pair Corralation between Bank Leumi and Harel Insurance
Assuming the 90 days trading horizon Bank Leumi Le Israel is expected to generate 0.83 times more return on investment than Harel Insurance. However, Bank Leumi Le Israel is 1.2 times less risky than Harel Insurance. It trades about 0.07 of its potential returns per unit of risk. Harel Insurance Investments is currently generating about 0.05 per unit of risk. If you would invest 273,407 in Bank Leumi Le Israel on August 27, 2024 and sell it today you would earn a total of 140,093 from holding Bank Leumi Le Israel or generate 51.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Leumi Le Israel vs. Harel Insurance Investments
Performance |
| Timeline |
| Bank Leumi Le |
| Harel Insurance Inve |
Bank Leumi and Harel Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and Harel Insurance
The main advantage of trading using opposite Bank Leumi and Harel Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, Harel Insurance 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 Harel Insurance will offset losses from the drop in Harel Insurance's long position.| Bank Leumi vs. Bank Hapoalim | Bank Leumi vs. Israel Discount Bank | Bank Leumi vs. Bezeq Israeli Telecommunication | Bank Leumi vs. Elbit Systems |
| Harel Insurance vs. Bank Hapoalim | Harel Insurance vs. Israel Discount Bank | Harel Insurance vs. Bezeq Israeli Telecommunication | Harel Insurance vs. Elbit 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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