Correlation Between Bank Leumi and Scope Metals
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Scope Metals 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 Scope Metals 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 Scope Metals Group, you can compare the effects of market volatilities on Bank Leumi and Scope Metals 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 Scope Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Scope Metals.
Diversification Opportunities for Bank Leumi and Scope Metals
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Scope is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Scope Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scope Metals 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 Scope Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scope Metals Group has no effect on the direction of Bank Leumi i.e., Bank Leumi and Scope Metals go up and down completely randomly.
Pair Corralation between Bank Leumi and Scope Metals
Assuming the 90 days trading horizon Bank Leumi is expected to generate 1.4 times less return on investment than Scope Metals. But when comparing it to its historical volatility, Bank Leumi Le Israel is 2.61 times less risky than Scope Metals. It trades about 0.73 of its potential returns per unit of risk. Scope Metals Group is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 1,165,000 in Scope Metals Group on August 28, 2024 and sell it today you would earn a total of 237,000 from holding Scope Metals Group or generate 20.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
Bank Leumi Le Israel vs. Scope Metals Group
Performance |
| Timeline |
| Bank Leumi Le |
| Scope Metals Group |
Bank Leumi and Scope Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and Scope Metals
The main advantage of trading using opposite Bank Leumi and Scope Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, Scope Metals 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 Scope Metals will offset losses from the drop in Scope Metals' long position.| Bank Leumi vs. Bank Hapoalim | Bank Leumi vs. Israel Discount Bank | Bank Leumi vs. Mizrahi Tefahot | Bank Leumi vs. Bezeq Israeli Telecommunication |
| Scope Metals vs. Delek Automotive Systems | Scope Metals vs. Kerur Holdings | Scope Metals vs. Neto ME Holdings | Scope Metals vs. Bank Leumi Le Israel |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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