Correlation Between Bank Hapoalim and Nawi Brothers
Can any of the company-specific risk be diversified away by investing in both Bank Hapoalim and Nawi Brothers 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 Nawi Brothers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Hapoalim and Nawi Brothers Group, you can compare the effects of market volatilities on Bank Hapoalim and Nawi Brothers 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 Nawi Brothers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Hapoalim and Nawi Brothers.
Diversification Opportunities for Bank Hapoalim and Nawi Brothers
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Nawi is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Bank Hapoalim and Nawi Brothers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nawi Brothers Group 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 Nawi Brothers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nawi Brothers Group has no effect on the direction of Bank Hapoalim i.e., Bank Hapoalim and Nawi Brothers go up and down completely randomly.
Pair Corralation between Bank Hapoalim and Nawi Brothers
Assuming the 90 days trading horizon Bank Hapoalim is expected to generate 1.19 times less return on investment than Nawi Brothers. But when comparing it to its historical volatility, Bank Hapoalim is 1.32 times less risky than Nawi Brothers. It trades about 0.56 of its potential returns per unit of risk. Nawi Brothers Group is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 302,900 in Nawi Brothers Group on August 29, 2024 and sell it today you would earn a total of 44,600 from holding Nawi Brothers Group or generate 14.72% 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. Nawi Brothers Group
Performance |
| Timeline |
| Bank Hapoalim |
| Nawi Brothers Group |
Bank Hapoalim and Nawi Brothers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Hapoalim and Nawi Brothers
The main advantage of trading using opposite Bank Hapoalim and Nawi Brothers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Hapoalim position performs unexpectedly, Nawi Brothers 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 Nawi Brothers will offset losses from the drop in Nawi Brothers' 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 |
| Nawi Brothers vs. Bank Hapoalim | Nawi Brothers vs. Israel Discount Bank | Nawi Brothers vs. Bezeq Israeli Telecommunication | Nawi Brothers 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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