Correlation Between Bank Hapoalim and Israel Discount
Can any of the company-specific risk be diversified away by investing in both Bank Hapoalim and Israel Discount 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 Israel Discount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Hapoalim and Israel Discount Bank, you can compare the effects of market volatilities on Bank Hapoalim and Israel Discount 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 Israel Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Hapoalim and Israel Discount.
Diversification Opportunities for Bank Hapoalim and Israel Discount
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Bank and Israel is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Bank Hapoalim and Israel Discount Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Discount Bank 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 Israel Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Discount Bank has no effect on the direction of Bank Hapoalim i.e., Bank Hapoalim and Israel Discount go up and down completely randomly.
Pair Corralation between Bank Hapoalim and Israel Discount
Assuming the 90 days trading horizon Bank Hapoalim is expected to generate 1.16 times less return on investment than Israel Discount. But when comparing it to its historical volatility, Bank Hapoalim is 1.1 times less risky than Israel Discount. It trades about 0.26 of its potential returns per unit of risk. Israel Discount Bank is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 198,200 in Israel Discount Bank on August 24, 2024 and sell it today you would earn a total of 41,200 from holding Israel Discount Bank or generate 20.79% 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. Israel Discount Bank
Performance |
| Timeline |
| Bank Hapoalim |
| Israel Discount Bank |
Bank Hapoalim and Israel Discount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Hapoalim and Israel Discount
The main advantage of trading using opposite Bank Hapoalim and Israel Discount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Hapoalim position performs unexpectedly, Israel Discount 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 Israel Discount will offset losses from the drop in Israel Discount's long position.| Bank Hapoalim vs. Bank Leumi Le Israel | Bank Hapoalim vs. Israel Discount Bank | Bank Hapoalim vs. Mizrahi Tefahot | Bank Hapoalim vs. Bezeq Israeli Telecommunication |
| Israel Discount vs. Bank Leumi Le Israel | Israel Discount vs. Bank Hapoalim | Israel Discount vs. Mizrahi Tefahot | Israel Discount 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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