Correlation Between Bank Leumi and Jerusalem
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Jerusalem 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 Jerusalem 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 Jerusalem, you can compare the effects of market volatilities on Bank Leumi and Jerusalem 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 Jerusalem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Jerusalem.
Diversification Opportunities for Bank Leumi and Jerusalem
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Jerusalem is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Jerusalem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jerusalem 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 Jerusalem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jerusalem has no effect on the direction of Bank Leumi i.e., Bank Leumi and Jerusalem go up and down completely randomly.
Pair Corralation between Bank Leumi and Jerusalem
Assuming the 90 days trading horizon Bank Leumi is expected to generate 1.55 times less return on investment than Jerusalem. But when comparing it to its historical volatility, Bank Leumi Le Israel is 1.55 times less risky than Jerusalem. It trades about 0.75 of its potential returns per unit of risk. Jerusalem is currently generating about 0.74 of returns per unit of risk over similar time horizon. If you would invest 126,200 in Jerusalem on August 29, 2024 and sell it today you would earn a total of 31,300 from holding Jerusalem or generate 24.8% 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. Jerusalem
Performance |
| Timeline |
| Bank Leumi Le |
| Jerusalem |
Bank Leumi and Jerusalem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and Jerusalem
The main advantage of trading using opposite Bank Leumi and Jerusalem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, Jerusalem 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 Jerusalem will offset losses from the drop in Jerusalem's long position.| Bank Leumi vs. Elbit Systems | Bank Leumi vs. Discount Investment Corp | Bank Leumi vs. Clal Insurance Enterprises | Bank Leumi vs. AudioCodes |
| Jerusalem vs. Mizrahi Tefahot | Jerusalem vs. First International Bank | Jerusalem vs. Israel Discount Bank | Jerusalem 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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