Correlation Between Payment Financial and Bank Leumi
Can any of the company-specific risk be diversified away by investing in both Payment Financial 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 Payment Financial and Bank Leumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payment Financial Technologies and Bank Leumi Le Israel, you can compare the effects of market volatilities on Payment Financial 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 Payment Financial with a short position of Bank Leumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payment Financial and Bank Leumi.
Diversification Opportunities for Payment Financial and Bank Leumi
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Payment and Bank is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Payment Financial Technologies 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 Payment Financial 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 Payment Financial Technologies 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 Payment Financial i.e., Payment Financial and Bank Leumi go up and down completely randomly.
Pair Corralation between Payment Financial and Bank Leumi
Assuming the 90 days trading horizon Payment Financial is expected to generate 1.41 times less return on investment than Bank Leumi. In addition to that, Payment Financial is 2.19 times more volatile than Bank Leumi Le Israel. It trades about 0.07 of its total potential returns per unit of risk. Bank Leumi Le Israel is currently generating about 0.22 per unit of volatility. If you would invest 303,468 in Bank Leumi Le Israel on September 2, 2024 and sell it today you would earn a total of 109,532 from holding Bank Leumi Le Israel or generate 36.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payment Financial Technologies vs. Bank Leumi Le Israel
Performance |
| Timeline |
| Payment Financial |
| Bank Leumi Le |
Payment Financial and Bank Leumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payment Financial and Bank Leumi
The main advantage of trading using opposite Payment Financial and Bank Leumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payment Financial 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.| Payment Financial vs. Telsys | Payment Financial vs. EN Shoham Business | Payment Financial vs. Brainsway | Payment Financial vs. Mivne Real Estate |
| Bank Leumi vs. Bank Hapoalim | Bank Leumi vs. Israel Discount Bank | Bank Leumi vs. Mizrahi Tefahot | Bank Leumi vs. Bezeq Israeli Telecommunication |
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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