Correlation Between Bank Leumi and Safe T
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Safe T 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 Safe T 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 Safe T Group, you can compare the effects of market volatilities on Bank Leumi and Safe T 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 Safe T. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Safe T.
Diversification Opportunities for Bank Leumi and Safe T
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Safe is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Safe T Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe T 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 Safe T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe T Group has no effect on the direction of Bank Leumi i.e., Bank Leumi and Safe T go up and down completely randomly.
Pair Corralation between Bank Leumi and Safe T
Assuming the 90 days trading horizon Bank Leumi Le Israel is expected to generate 0.21 times more return on investment than Safe T. However, Bank Leumi Le Israel is 4.72 times less risky than Safe T. It trades about 0.78 of its potential returns per unit of risk. Safe T Group is currently generating about -0.13 per unit of risk. If you would invest 371,500 in Bank Leumi Le Israel on August 29, 2024 and sell it today you would earn a total of 57,600 from holding Bank Leumi Le Israel or generate 15.5% 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. Safe T Group
Performance |
| Timeline |
| Bank Leumi Le |
| Safe T Group |
Bank Leumi and Safe T Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and Safe T
The main advantage of trading using opposite Bank Leumi and Safe T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, Safe T 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 Safe T will offset losses from the drop in Safe T'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 |
| Safe T vs. One Software Technologies | Safe T vs. Abra Information Technologies | Safe T vs. Ai Conversation Systems | Safe T vs. Fantasy Network |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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