Correlation Between Mirland Development and Bank Leumi
Can any of the company-specific risk be diversified away by investing in both Mirland Development 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 Mirland Development and Bank Leumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mirland Development and Bank Leumi Le Israel, you can compare the effects of market volatilities on Mirland Development 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 Mirland Development with a short position of Bank Leumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mirland Development and Bank Leumi.
Diversification Opportunities for Mirland Development and Bank Leumi
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mirland and Bank is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Mirland Development 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 Mirland Development 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 Mirland Development 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 Mirland Development i.e., Mirland Development and Bank Leumi go up and down completely randomly.
Pair Corralation between Mirland Development and Bank Leumi
Assuming the 90 days trading horizon Mirland Development is expected to generate 1.77 times more return on investment than Bank Leumi. However, Mirland Development is 1.77 times more volatile than Bank Leumi Le Israel. It trades about 0.09 of its potential returns per unit of risk. Bank Leumi Le Israel is currently generating about -0.15 per unit of risk. If you would invest 2.10 in Mirland Development on January 26, 2024 and sell it today you would earn a total of 0.10 from holding Mirland Development or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mirland Development vs. Bank Leumi Le Israel
Performance |
| Timeline |
| Mirland Development |
| Bank Leumi Le |
Mirland Development and Bank Leumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mirland Development and Bank Leumi
The main advantage of trading using opposite Mirland Development and Bank Leumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mirland Development 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.| Mirland Development vs. Azrieli Group | Mirland Development vs. Melisron | Mirland Development vs. Amot Investments | Mirland Development vs. Mivne Real Estate |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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