Correlation Between Bank Leumi and EN Shoham
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and EN Shoham 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 EN Shoham 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 EN Shoham Business, you can compare the effects of market volatilities on Bank Leumi and EN Shoham 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 EN Shoham. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and EN Shoham.
Diversification Opportunities for Bank Leumi and EN Shoham
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and SHOM is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and EN Shoham Business in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EN Shoham Business 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 EN Shoham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EN Shoham Business has no effect on the direction of Bank Leumi i.e., Bank Leumi and EN Shoham go up and down completely randomly.
Pair Corralation between Bank Leumi and EN Shoham
Assuming the 90 days trading horizon Bank Leumi is expected to generate 1.31 times less return on investment than EN Shoham. But when comparing it to its historical volatility, Bank Leumi Le Israel is 1.07 times less risky than EN Shoham. It trades about 0.38 of its potential returns per unit of risk. EN Shoham Business is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 54,760 in EN Shoham Business on August 28, 2024 and sell it today you would earn a total of 11,690 from holding EN Shoham Business or generate 21.35% 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. EN Shoham Business
Performance |
| Timeline |
| Bank Leumi Le |
| EN Shoham Business |
Bank Leumi and EN Shoham Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and EN Shoham
The main advantage of trading using opposite Bank Leumi and EN Shoham positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, EN Shoham 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 EN Shoham will offset losses from the drop in EN Shoham's long position.| Bank Leumi vs. Bank Hapoalim | Bank Leumi vs. Israel Discount Bank | Bank Leumi vs. Bezeq Israeli Telecommunication | Bank Leumi vs. Elbit Systems |
| EN Shoham vs. Menif Financial Services | EN Shoham vs. Accel Solutions Group | EN Shoham vs. Rani Zim Shopping | EN Shoham 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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