Correlation Between Matrix and Bank Leumi
Can any of the company-specific risk be diversified away by investing in both Matrix and Bank Leumi 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 Matrix and Bank Leumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matrix and Bank Leumi Le Israel, you can compare the effects of market volatilities on Matrix and Bank Leumi 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 Matrix with a short position of Bank Leumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matrix and Bank Leumi.
Diversification Opportunities for Matrix and Bank Leumi
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Matrix and Bank is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Matrix and Bank Leumi Le Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Leumi Le and Matrix 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 Matrix are associated (or correlated) with Bank Leumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Leumi Le has no effect on the direction of Matrix i.e., Matrix and Bank Leumi go up and down completely randomly.
Pair Corralation between Matrix and Bank Leumi
Assuming the 90 days trading horizon Matrix is expected to generate 2.26 times less return on investment than Bank Leumi. But when comparing it to its historical volatility, Matrix is 1.04 times less risky than Bank Leumi. It trades about 0.04 of its potential returns per unit of risk. Bank Leumi Le Israel is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 261,232 in Bank Leumi Le Israel on September 1, 2024 and sell it today you would earn a total of 151,768 from holding Bank Leumi Le Israel or generate 58.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matrix vs. Bank Leumi Le Israel
Performance |
| Timeline |
| Matrix |
| Bank Leumi Le |
Matrix and Bank Leumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matrix and Bank Leumi
The main advantage of trading using opposite Matrix and Bank Leumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matrix position performs unexpectedly, Bank Leumi 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 Bank Leumi will offset losses from the drop in Bank Leumi's long position.The idea behind Matrix and Bank Leumi Le Israel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bank Leumi vs. Menif Financial Services | Bank Leumi vs. Accel Solutions Group | Bank Leumi vs. Rani Zim Shopping | Bank Leumi vs. Rapac Communication Infrastructure |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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