Correlation Between Bank Leumi and ICL Israel
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and ICL Israel 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 ICL Israel 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 ICL Israel Chemicals, you can compare the effects of market volatilities on Bank Leumi and ICL Israel 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 ICL Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and ICL Israel.
Diversification Opportunities for Bank Leumi and ICL Israel
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and ICL is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and ICL Israel Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICL Israel Chemicals 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 ICL Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICL Israel Chemicals has no effect on the direction of Bank Leumi i.e., Bank Leumi and ICL Israel go up and down completely randomly.
Pair Corralation between Bank Leumi and ICL Israel
Assuming the 90 days trading horizon Bank Leumi Le Israel is expected to generate 0.6 times more return on investment than ICL Israel. However, Bank Leumi Le Israel is 1.66 times less risky than ICL Israel. It trades about 0.3 of its potential returns per unit of risk. ICL Israel Chemicals is currently generating about 0.04 per unit of risk. If you would invest 349,200 in Bank Leumi Le Israel on August 29, 2024 and sell it today you would earn a total of 79,900 from holding Bank Leumi Le Israel or generate 22.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Leumi Le Israel vs. ICL Israel Chemicals
Performance |
| Timeline |
| Bank Leumi Le |
| ICL Israel Chemicals |
Bank Leumi and ICL Israel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and ICL Israel
The main advantage of trading using opposite Bank Leumi and ICL Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, ICL Israel 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 ICL Israel will offset losses from the drop in ICL Israel's long position.| Bank Leumi vs. Elbit Systems | Bank Leumi vs. Discount Investment Corp | Bank Leumi vs. Clal Insurance Enterprises | Bank Leumi vs. AudioCodes |
| ICL Israel vs. Elbit Systems | ICL Israel vs. Bezeq Israeli Telecommunication | ICL Israel vs. Teva Pharmaceutical Industries | ICL Israel 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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