Correlation Between Bank Leumi and Trendline
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Trendline 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 Trendline 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 Trendline, you can compare the effects of market volatilities on Bank Leumi and Trendline 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 Trendline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Trendline.
Diversification Opportunities for Bank Leumi and Trendline
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Trendline is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Trendline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trendline 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 Trendline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trendline has no effect on the direction of Bank Leumi i.e., Bank Leumi and Trendline go up and down completely randomly.
Pair Corralation between Bank Leumi and Trendline
Assuming the 90 days trading horizon Bank Leumi Le Israel is expected to generate 0.39 times more return on investment than Trendline. However, Bank Leumi Le Israel is 2.59 times less risky than Trendline. It trades about 0.3 of its potential returns per unit of risk. Trendline is currently generating about 0.03 per unit of risk. If you would invest 444,200 in Bank Leumi Le Israel on November 29, 2024 and sell it today you would earn a total of 30,800 from holding Bank Leumi Le Israel or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Leumi Le Israel vs. Trendline
Performance |
| Timeline |
| Bank Leumi Le |
| Trendline |
Bank Leumi and Trendline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and Trendline
The main advantage of trading using opposite Bank Leumi and Trendline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, Trendline 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 Trendline will offset losses from the drop in Trendline'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 |
| Trendline vs. Migdal Insurance | Trendline vs. Sure Tech Investments LP | Trendline vs. Global Knafaim Leasing | Trendline vs. Clal Biotechnology Industries |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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