Correlation Between Bank Leumi and Nova
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 Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Leumi Le Israel vs. Nova
Performance |
| Timeline |
| Bank Leumi Le |
| Nova |
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.| Bank Leumi vs. Elbit Systems | Bank Leumi vs. Discount Investment Corp | Bank Leumi vs. AudioCodes | Bank Leumi vs. Shufersal |
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.
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