Correlation Between Bank Leumi and Nova

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Nova 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 Nova 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 Nova, you can compare the effects of market volatilities on Bank Leumi and Nova 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 Nova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Nova.

Diversification Opportunities for Bank Leumi and Nova

-0.5
  Correlation Coefficient

Very good diversification

The 3 months correlation between Bank and Nova is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Nova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova 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 Nova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova has no effect on the direction of Bank Leumi i.e., Bank Leumi and Nova go up and down completely randomly.

Pair Corralation between Bank Leumi and Nova

Assuming the 90 days trading horizon Bank Leumi Le Israel is expected to generate 0.33 times more return on investment than Nova. However, Bank Leumi Le Israel is 3.02 times less risky than Nova. It trades about 0.54 of its potential returns per unit of risk. Nova is currently generating about -0.15 per unit of risk. If you would invest  367,848  in Bank Leumi Le Israel on August 30, 2024 and sell it today you would earn a total of  47,752  from holding Bank Leumi Le Israel or generate 12.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Bank Leumi Le Israel  vs.  Nova

 Performance 
       Timeline  
Bank Leumi Le 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Bank Leumi Le Israel are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bank Leumi sustained solid returns over the last few months and may actually be approaching a breakup point.
Nova 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nova has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Bank Leumi and Nova Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank Leumi and Nova

The main advantage of trading using opposite Bank Leumi and Nova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, Nova 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 Nova will offset losses from the drop in Nova's long position.
The idea behind Bank Leumi Le Israel and Nova pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

Other Complementary Tools

Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Commodity Directory
Find actively traded commodities issued by global exchanges