Correlation Between Value Capital and Bank Leumi
Can any of the company-specific risk be diversified away by investing in both Value Capital 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 Value Capital and Bank Leumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Capital One and Bank Leumi Le Israel, you can compare the effects of market volatilities on Value Capital 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 Value Capital with a short position of Bank Leumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Capital and Bank Leumi.
Diversification Opportunities for Value Capital and Bank Leumi
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Value and Bank is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Value Capital One 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 Value Capital 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 Value Capital One 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 Value Capital i.e., Value Capital and Bank Leumi go up and down completely randomly.
Pair Corralation between Value Capital and Bank Leumi
Assuming the 90 days trading horizon Value Capital One is expected to under-perform the Bank Leumi. In addition to that, Value Capital is 1.47 times more volatile than Bank Leumi Le Israel. It trades about -0.34 of its total potential returns per unit of risk. Bank Leumi Le Israel is currently generating about 0.05 per unit of volatility. If you would invest 277,044 in Bank Leumi Le Israel on January 18, 2024 and sell it today you would earn a total of 6,856 from holding Bank Leumi Le Israel or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Value Capital One vs. Bank Leumi Le Israel
Performance |
| Timeline |
| Value Capital One |
| Bank Leumi Le |
Value Capital and Bank Leumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Capital and Bank Leumi
The main advantage of trading using opposite Value Capital and Bank Leumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Capital 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.The idea behind Value Capital One and Bank Leumi Le Israel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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