Correlation Between Bank Leumi and Holmes Place
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Holmes Place 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 Holmes Place 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 Holmes Place International, you can compare the effects of market volatilities on Bank Leumi and Holmes Place 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 Holmes Place. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Holmes Place.
Diversification Opportunities for Bank Leumi and Holmes Place
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Holmes is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Holmes Place International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmes Place Interna 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 Holmes Place. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmes Place Interna has no effect on the direction of Bank Leumi i.e., Bank Leumi and Holmes Place go up and down completely randomly.
Pair Corralation between Bank Leumi and Holmes Place
Assuming the 90 days trading horizon Bank Leumi Le Israel is expected to generate 2.32 times more return on investment than Holmes Place. However, Bank Leumi is 2.32 times more volatile than Holmes Place International. It trades about 0.27 of its potential returns per unit of risk. Holmes Place International is currently generating about 0.41 per unit of risk. If you would invest 440,700 in Bank Leumi Le Israel on November 27, 2024 and sell it today you would earn a total of 26,500 from holding Bank Leumi Le Israel or generate 6.01% 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. Holmes Place International
Performance |
| Timeline |
| Bank Leumi Le |
| Holmes Place Interna |
Bank Leumi and Holmes Place Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and Holmes Place
The main advantage of trading using opposite Bank Leumi and Holmes Place positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, Holmes Place 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 Holmes Place will offset losses from the drop in Holmes Place's long position.| Bank Leumi vs. Bank Hapoalim | Bank Leumi vs. Israel Discount Bank | Bank Leumi vs. Mizrahi Tefahot | Bank Leumi vs. Bezeq Israeli Telecommunication |
| Holmes Place vs. Fattal 1998 Holdings | Holmes Place vs. Delek Group | Holmes Place vs. Bank Leumi Le Israel | Holmes Place vs. Matrix |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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