Correlation Between Mizrahi Tefahot and Bank Leumi
Can any of the company-specific risk be diversified away by investing in both Mizrahi Tefahot 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 Mizrahi Tefahot and Bank Leumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mizrahi Tefahot and Bank Leumi Le Israel, you can compare the effects of market volatilities on Mizrahi Tefahot 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 Mizrahi Tefahot with a short position of Bank Leumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mizrahi Tefahot and Bank Leumi.
Diversification Opportunities for Mizrahi Tefahot and Bank Leumi
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mizrahi and Bank is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Mizrahi Tefahot 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 Mizrahi Tefahot 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 Mizrahi Tefahot 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 Mizrahi Tefahot i.e., Mizrahi Tefahot and Bank Leumi go up and down completely randomly.
Pair Corralation between Mizrahi Tefahot and Bank Leumi
Assuming the 90 days trading horizon Mizrahi Tefahot is expected to under-perform the Bank Leumi. In addition to that, Mizrahi Tefahot is 1.14 times more volatile than Bank Leumi Le Israel. It trades about -0.05 of its total potential returns per unit of risk. Bank Leumi Le Israel is currently generating about 0.04 per unit of volatility. If you would invest 277,044 in Bank Leumi Le Israel on January 20, 2024 and sell it today you would earn a total of 5,956 from holding Bank Leumi Le Israel or generate 2.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mizrahi Tefahot vs. Bank Leumi Le Israel
Performance |
| Timeline |
| Mizrahi Tefahot |
| Bank Leumi Le |
Mizrahi Tefahot and Bank Leumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mizrahi Tefahot and Bank Leumi
The main advantage of trading using opposite Mizrahi Tefahot and Bank Leumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mizrahi Tefahot 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.| Mizrahi Tefahot vs. Rani Zim Shopping | Mizrahi Tefahot vs. Accel Solutions Group | Mizrahi Tefahot vs. Rapac Communication Infrastructure |
| Bank Leumi vs. Rani Zim Shopping | Bank Leumi vs. Accel Solutions Group | Bank Leumi vs. Rapac Communication Infrastructure |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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