Correlation Between Standard Bank and Israel Discount
Can any of the company-specific risk be diversified away by investing in both Standard Bank 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 Standard Bank and Israel Discount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Bank Group and Israel Discount Bank, you can compare the effects of market volatilities on Standard Bank 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 Standard Bank with a short position of Israel Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Bank and Israel Discount.
Diversification Opportunities for Standard Bank and Israel Discount
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Standard and Israel is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group 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 Standard Bank 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 Standard Bank Group 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 Standard Bank i.e., Standard Bank and Israel Discount go up and down completely randomly.
Pair Corralation between Standard Bank and Israel Discount
Assuming the 90 days horizon Standard Bank is expected to generate 2.88 times less return on investment than Israel Discount. In addition to that, Standard Bank is 1.3 times more volatile than Israel Discount Bank. It trades about 0.04 of its total potential returns per unit of risk. Israel Discount Bank is currently generating about 0.14 per unit of volatility. If you would invest 5,200 in Israel Discount Bank on August 25, 2024 and sell it today you would earn a total of 619.00 from holding Israel Discount Bank or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Bank Group vs. Israel Discount Bank
Performance |
| Timeline |
| Standard Bank Group |
| Israel Discount Bank |
Standard Bank and Israel Discount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Bank and Israel Discount
The main advantage of trading using opposite Standard Bank and Israel Discount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Bank 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.| Standard Bank vs. PSB Holdings | Standard Bank vs. United Overseas Bank | Standard Bank vs. Turkiye Garanti Bankasi | Standard Bank vs. Hang Seng Bank |
| Israel Discount vs. Baraboo Bancorporation | Israel Discount vs. Schweizerische Nationalbank | Israel Discount vs. Danske Bank AS | Israel Discount vs. Absa Group Limited |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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