Correlation Between Bank Hapoalim and Oil Refineries
Can any of the company-specific risk be diversified away by investing in both Bank Hapoalim and Oil Refineries 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 Oil Refineries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Hapoalim and Oil Refineries, you can compare the effects of market volatilities on Bank Hapoalim and Oil Refineries 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 Oil Refineries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Hapoalim and Oil Refineries.
Diversification Opportunities for Bank Hapoalim and Oil Refineries
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Oil is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bank Hapoalim and Oil Refineries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Refineries 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 Oil Refineries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Refineries has no effect on the direction of Bank Hapoalim i.e., Bank Hapoalim and Oil Refineries go up and down completely randomly.
Pair Corralation between Bank Hapoalim and Oil Refineries
Assuming the 90 days trading horizon Bank Hapoalim is expected to generate 3.18 times less return on investment than Oil Refineries. But when comparing it to its historical volatility, Bank Hapoalim is 1.99 times less risky than Oil Refineries. It trades about 0.17 of its potential returns per unit of risk. Oil Refineries is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 9,350 in Oil Refineries on November 3, 2024 and sell it today you would earn a total of 1,200 from holding Oil Refineries or generate 12.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Hapoalim vs. Oil Refineries
Performance |
| Timeline |
| Bank Hapoalim |
| Oil Refineries |
Bank Hapoalim and Oil Refineries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Hapoalim and Oil Refineries
The main advantage of trading using opposite Bank Hapoalim and Oil Refineries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Hapoalim position performs unexpectedly, Oil Refineries 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 Oil Refineries will offset losses from the drop in Oil Refineries' 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 |
| Oil Refineries vs. Delek Group | Oil Refineries vs. Bank Leumi Le Israel | Oil Refineries vs. ICL Israel Chemicals | Oil Refineries vs. Bank Hapoalim |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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