Correlation Between Bank Hapoalim and Bank Leumi
Can any of the company-specific risk be diversified away by investing in both Bank Hapoalim 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 Bank Hapoalim and Bank Leumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Hapoalim and Bank Leumi Le Israel, you can compare the effects of market volatilities on Bank Hapoalim 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 Bank Hapoalim with a short position of Bank Leumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Hapoalim and Bank Leumi.
Diversification Opportunities for Bank Hapoalim and Bank Leumi
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Bank and Bank is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Bank Hapoalim 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 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 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 Bank Hapoalim i.e., Bank Hapoalim and Bank Leumi go up and down completely randomly.
Pair Corralation between Bank Hapoalim and Bank Leumi
Assuming the 90 days trading horizon Bank Hapoalim is expected to generate 1.07 times more return on investment than Bank Leumi. However, Bank Hapoalim is 1.07 times more volatile than Bank Leumi Le Israel. It trades about 0.17 of its potential returns per unit of risk. Bank Leumi Le Israel is currently generating about 0.16 per unit of risk. If you would invest 442,500 in Bank Hapoalim on November 3, 2024 and sell it today you would earn a total of 17,300 from holding Bank Hapoalim or generate 3.91% 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. Bank Leumi Le Israel
Performance |
| Timeline |
| Bank Hapoalim |
| Bank Leumi Le |
Bank Hapoalim and Bank Leumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Hapoalim and Bank Leumi
The main advantage of trading using opposite Bank Hapoalim and Bank Leumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Hapoalim 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.| Bank Hapoalim vs. Bank Leumi Le Israel | Bank Hapoalim vs. Israel Discount Bank | Bank Hapoalim vs. Mizrahi Tefahot | Bank Hapoalim vs. Bezeq Israeli Telecommunication |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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