Correlation Between Bank Hapoalim and Clal Insurance
Can any of the company-specific risk be diversified away by investing in both Bank Hapoalim and Clal Insurance 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 Hapoalim and Clal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Hapoalim and Clal Insurance Enterprises, you can compare the effects of market volatilities on Bank Hapoalim and Clal Insurance 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 Hapoalim with a short position of Clal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Hapoalim and Clal Insurance.
Diversification Opportunities for Bank Hapoalim and Clal Insurance
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Clal is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bank Hapoalim and Clal Insurance Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Insurance Enter and Bank Hapoalim 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 Hapoalim are associated (or correlated) with Clal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Insurance Enter has no effect on the direction of Bank Hapoalim i.e., Bank Hapoalim and Clal Insurance go up and down completely randomly.
Pair Corralation between Bank Hapoalim and Clal Insurance
Assuming the 90 days trading horizon Bank Hapoalim is expected to generate 1.56 times less return on investment than Clal Insurance. But when comparing it to its historical volatility, Bank Hapoalim is 1.75 times less risky than Clal Insurance. It trades about 0.52 of its potential returns per unit of risk. Clal Insurance Enterprises is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 648,500 in Clal Insurance Enterprises on August 28, 2024 and sell it today you would earn a total of 113,900 from holding Clal Insurance Enterprises or generate 17.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Hapoalim vs. Clal Insurance Enterprises
Performance |
| Timeline |
| Bank Hapoalim |
| Clal Insurance Enter |
Bank Hapoalim and Clal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Hapoalim and Clal Insurance
The main advantage of trading using opposite Bank Hapoalim and Clal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Hapoalim position performs unexpectedly, Clal Insurance 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 Clal Insurance will offset losses from the drop in Clal Insurance's long position.| Bank Hapoalim vs. Israel Discount Bank | Bank Hapoalim vs. Bezeq Israeli Telecommunication | Bank Hapoalim vs. Elbit Systems |
| Clal Insurance vs. Bank Hapoalim | Clal Insurance vs. Israel Discount Bank | Clal Insurance vs. Bezeq Israeli Telecommunication | Clal Insurance 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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