Correlation Between Bank Leumi and Nawi Brothers
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Nawi Brothers 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 Nawi Brothers 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 Nawi Brothers Group, you can compare the effects of market volatilities on Bank Leumi and Nawi Brothers 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 Nawi Brothers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Nawi Brothers.
Diversification Opportunities for Bank Leumi and Nawi Brothers
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Nawi is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Nawi Brothers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nawi Brothers Group 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 Nawi Brothers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nawi Brothers Group has no effect on the direction of Bank Leumi i.e., Bank Leumi and Nawi Brothers go up and down completely randomly.
Pair Corralation between Bank Leumi and Nawi Brothers
Assuming the 90 days trading horizon Bank Leumi Le Israel is expected to generate 0.74 times more return on investment than Nawi Brothers. However, Bank Leumi Le Israel is 1.36 times less risky than Nawi Brothers. It trades about 0.41 of its potential returns per unit of risk. Nawi Brothers Group is currently generating about 0.22 per unit of risk. If you would invest 376,850 in Bank Leumi Le Israel on September 1, 2024 and sell it today you would earn a total of 36,150 from holding Bank Leumi Le Israel or generate 9.59% 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. Nawi Brothers Group
Performance |
| Timeline |
| Bank Leumi Le |
| Nawi Brothers Group |
Bank Leumi and Nawi Brothers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and Nawi Brothers
The main advantage of trading using opposite Bank Leumi and Nawi Brothers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, Nawi Brothers 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 Nawi Brothers will offset losses from the drop in Nawi Brothers' long position.| Bank Leumi vs. Menif Financial Services | Bank Leumi vs. Accel Solutions Group | Bank Leumi vs. Rani Zim Shopping | Bank Leumi vs. Mivtach Shamir |
| Nawi Brothers vs. Menif Financial Services | Nawi Brothers vs. Accel Solutions Group | Nawi Brothers vs. Rani Zim Shopping | Nawi Brothers vs. Mivtach Shamir |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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