Correlation Between Bank Leumi and Willy Food
Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Willy Food 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 Willy Food 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 Willy Food, you can compare the effects of market volatilities on Bank Leumi and Willy Food 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 Willy Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Willy Food.
Diversification Opportunities for Bank Leumi and Willy Food
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Willy is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Willy Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willy Food 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 Willy Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willy Food has no effect on the direction of Bank Leumi i.e., Bank Leumi and Willy Food go up and down completely randomly.
Pair Corralation between Bank Leumi and Willy Food
Assuming the 90 days trading horizon Bank Leumi is expected to generate 1.41 times less return on investment than Willy Food. But when comparing it to its historical volatility, Bank Leumi Le Israel is 2.95 times less risky than Willy Food. It trades about 0.73 of its potential returns per unit of risk. Willy Food is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 206,900 in Willy Food on August 27, 2024 and sell it today you would earn a total of 39,700 from holding Willy Food or generate 19.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Leumi Le Israel vs. Willy Food
Performance |
| Timeline |
| Bank Leumi Le |
| Willy Food |
Bank Leumi and Willy Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Leumi and Willy Food
The main advantage of trading using opposite Bank Leumi and Willy Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Leumi position performs unexpectedly, Willy Food 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 Willy Food will offset losses from the drop in Willy Food'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 |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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