Correlation Between Bank Leumi and Libra Insurance
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Libra 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 Libra 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 Libra Insurance, you can compare the effects of market volatilities on Bank Leumi and Libra 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 Libra Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Libra Insurance.
Diversification Opportunities for Bank Leumi and Libra Insurance
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Libra is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Libra Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Libra Insurance 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 Libra Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Libra Insurance has no effect on the direction of Bank Leumi i.e., Bank Leumi and Libra Insurance go up and down completely randomly.
Pair Corralation between Bank Leumi and Libra Insurance
Assuming the 90 days trading horizon Bank Leumi is expected to generate 2.03 times less return on investment than Libra Insurance. But when comparing it to its historical volatility, Bank Leumi Le Israel is 2.5 times less risky than Libra Insurance. It trades about 0.48 of its potential returns per unit of risk. Libra Insurance is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 73,026 in Libra Insurance on August 31, 2024 and sell it today you would earn a total of 16,674 from holding Libra Insurance or generate 22.83% 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. Libra Insurance
Performance |
| Timeline |
| Bank Leumi Le |
| Libra Insurance |
Bank Leumi and Libra Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and Libra Insurance
The main advantage of trading using opposite Bank Leumi and Libra Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, Libra 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 Libra Insurance will offset losses from the drop in Libra Insurance'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 |
| Libra Insurance vs. Brainsway | Libra Insurance vs. Mivne Real Estate | Libra Insurance vs. Photomyne | Libra Insurance vs. Israel Land Development |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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