Correlation Between Overseas Commerce and Bank Hapoalim
Can any of the company-specific risk be diversified away by investing in both Overseas Commerce and Bank Hapoalim 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 Overseas Commerce and Bank Hapoalim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Overseas Commerce and Bank Hapoalim, you can compare the effects of market volatilities on Overseas Commerce and Bank Hapoalim 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 Overseas Commerce with a short position of Bank Hapoalim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Overseas Commerce and Bank Hapoalim.
Diversification Opportunities for Overseas Commerce and Bank Hapoalim
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Overseas and Bank is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Overseas Commerce and Bank Hapoalim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Hapoalim and Overseas Commerce 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 Overseas Commerce are associated (or correlated) with Bank Hapoalim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Hapoalim has no effect on the direction of Overseas Commerce i.e., Overseas Commerce and Bank Hapoalim go up and down completely randomly.
Pair Corralation between Overseas Commerce and Bank Hapoalim
Assuming the 90 days trading horizon Overseas Commerce is expected to generate 0.69 times more return on investment than Bank Hapoalim. However, Overseas Commerce is 1.44 times less risky than Bank Hapoalim. It trades about 0.42 of its potential returns per unit of risk. Bank Hapoalim is currently generating about 0.17 per unit of risk. If you would invest 41,420 in Overseas Commerce on November 2, 2024 and sell it today you would earn a total of 2,810 from holding Overseas Commerce or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Overseas Commerce vs. Bank Hapoalim
Performance |
| Timeline |
| Overseas Commerce |
| Bank Hapoalim |
Overseas Commerce and Bank Hapoalim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Overseas Commerce and Bank Hapoalim
The main advantage of trading using opposite Overseas Commerce and Bank Hapoalim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Overseas Commerce position performs unexpectedly, Bank Hapoalim 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 Hapoalim will offset losses from the drop in Bank Hapoalim's long position.| Overseas Commerce vs. Arad Investment Industrial | Overseas Commerce vs. Skyline Investments | Overseas Commerce vs. Meitav Dash Investments | Overseas Commerce vs. Azorim Investment Development |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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