Correlation Between Palram and Bank Leumi
Can any of the company-specific risk be diversified away by investing in both Palram 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 Palram and Bank Leumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palram and Bank Leumi Le Israel, you can compare the effects of market volatilities on Palram 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 Palram with a short position of Bank Leumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palram and Bank Leumi.
Diversification Opportunities for Palram and Bank Leumi
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Palram and Bank is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Palram 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 Palram 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 Palram 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 Palram i.e., Palram and Bank Leumi go up and down completely randomly.
Pair Corralation between Palram and Bank Leumi
Assuming the 90 days trading horizon Palram is expected to generate 1.38 times more return on investment than Bank Leumi. However, Palram is 1.38 times more volatile than Bank Leumi Le Israel. It trades about 0.25 of its potential returns per unit of risk. Bank Leumi Le Israel is currently generating about 0.05 per unit of risk. If you would invest 365,280 in Palram on January 24, 2024 and sell it today you would earn a total of 131,820 from holding Palram or generate 36.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Palram vs. Bank Leumi Le Israel
Performance |
| Timeline |
| Palram |
| Bank Leumi Le |
Palram and Bank Leumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palram and Bank Leumi
The main advantage of trading using opposite Palram and Bank Leumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palram 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.| Palram vs. Neto ME Holdings | Palram vs. Aryt Industries | Palram vs. Kerur Holdings | Palram vs. Globrands Group |
| 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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