Correlation Between Brand and Bank Leumi
Can any of the company-specific risk be diversified away by investing in both Brand 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 Brand and Bank Leumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brand Group and Bank Leumi Le Israel, you can compare the effects of market volatilities on Brand 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 Brand with a short position of Bank Leumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brand and Bank Leumi.
Diversification Opportunities for Brand and Bank Leumi
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Brand and Bank is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Brand Group 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 Brand 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 Brand Group 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 Brand i.e., Brand and Bank Leumi go up and down completely randomly.
Pair Corralation between Brand and Bank Leumi
Assuming the 90 days trading horizon Brand Group is expected to under-perform the Bank Leumi. In addition to that, Brand is 1.1 times more volatile than Bank Leumi Le Israel. It trades about -0.07 of its total potential returns per unit of risk. Bank Leumi Le Israel is currently generating about 0.0 per unit of volatility. If you would invest 320,010 in Bank Leumi Le Israel on January 17, 2024 and sell it today you would lose (32,810) from holding Bank Leumi Le Israel or give up 10.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Brand Group vs. Bank Leumi Le Israel
Performance |
| Timeline |
| Brand Group |
| Bank Leumi Le |
Brand and Bank Leumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brand and Bank Leumi
The main advantage of trading using opposite Brand and Bank Leumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brand 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.| Brand vs. Arad | Brand vs. Alony Hetz Properties | Brand vs. Airport City | Brand vs. Harel Insurance Investments |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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