Correlation Between Bank Hapoalim and Evogene
Can any of the company-specific risk be diversified away by investing in both Bank Hapoalim and Evogene 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 Bank Hapoalim and Evogene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Hapoalim and Evogene, you can compare the effects of market volatilities on Bank Hapoalim and Evogene 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 Bank Hapoalim with a short position of Evogene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Hapoalim and Evogene.
Diversification Opportunities for Bank Hapoalim and Evogene
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Evogene is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bank Hapoalim and Evogene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evogene and Bank Hapoalim 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 Bank Hapoalim are associated (or correlated) with Evogene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evogene has no effect on the direction of Bank Hapoalim i.e., Bank Hapoalim and Evogene go up and down completely randomly.
Pair Corralation between Bank Hapoalim and Evogene
Assuming the 90 days trading horizon Bank Hapoalim is expected to generate 2.52 times less return on investment than Evogene. But when comparing it to its historical volatility, Bank Hapoalim is 2.52 times less risky than Evogene. It trades about 0.05 of its potential returns per unit of risk. Evogene is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 21,200 in Evogene on January 26, 2024 and sell it today you would earn a total of 4,920 from holding Evogene or generate 23.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Hapoalim vs. Evogene
Performance |
| Timeline |
| Bank Hapoalim |
| Evogene |
Bank Hapoalim and Evogene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Hapoalim and Evogene
The main advantage of trading using opposite Bank Hapoalim and Evogene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Hapoalim position performs unexpectedly, Evogene 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 Evogene will offset losses from the drop in Evogene's long position.The idea behind Bank Hapoalim and Evogene 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.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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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