Correlation Between Bank Leumi and Inrom Construction
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Inrom Construction 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 Inrom Construction 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 Inrom Construction Industries, you can compare the effects of market volatilities on Bank Leumi and Inrom Construction 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 Inrom Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Inrom Construction.
Diversification Opportunities for Bank Leumi and Inrom Construction
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Inrom is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Inrom Construction Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inrom Construction 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 Inrom Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inrom Construction has no effect on the direction of Bank Leumi i.e., Bank Leumi and Inrom Construction go up and down completely randomly.
Pair Corralation between Bank Leumi and Inrom Construction
Assuming the 90 days trading horizon Bank Leumi Le Israel is expected to generate 0.58 times more return on investment than Inrom Construction. However, Bank Leumi Le Israel is 1.74 times less risky than Inrom Construction. It trades about 0.16 of its potential returns per unit of risk. Inrom Construction Industries is currently generating about -0.08 per unit of risk. If you would invest 433,300 in Bank Leumi Le Israel on November 3, 2024 and sell it today you would earn a total of 15,200 from holding Bank Leumi Le Israel or generate 3.51% 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. Inrom Construction Industries
Performance |
| Timeline |
| Bank Leumi Le |
| Inrom Construction |
Bank Leumi and Inrom Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and Inrom Construction
The main advantage of trading using opposite Bank Leumi and Inrom Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, Inrom Construction 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 Inrom Construction will offset losses from the drop in Inrom Construction'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 |
| Inrom Construction vs. Israel Discount Bank | Inrom Construction vs. Shufersal | Inrom Construction vs. Sella Real Estate | Inrom Construction vs. Hilan |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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