Correlation Between Bank Hapoalim and Israel Corp
Can any of the company-specific risk be diversified away by investing in both Bank Hapoalim and Israel Corp 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 Israel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Hapoalim and Israel Corp, you can compare the effects of market volatilities on Bank Hapoalim and Israel Corp 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 Israel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Hapoalim and Israel Corp.
Diversification Opportunities for Bank Hapoalim and Israel Corp
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Israel is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank Hapoalim and Israel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Corp 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 Israel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Corp has no effect on the direction of Bank Hapoalim i.e., Bank Hapoalim and Israel Corp go up and down completely randomly.
Pair Corralation between Bank Hapoalim and Israel Corp
Assuming the 90 days trading horizon Bank Hapoalim is expected to generate 1.0 times more return on investment than Israel Corp. However, Bank Hapoalim is 1.0 times less risky than Israel Corp. It trades about -0.11 of its potential returns per unit of risk. Israel Corp is currently generating about -0.2 per unit of risk. If you would invest 340,000 in Bank Hapoalim on January 24, 2024 and sell it today you would lose (13,800) from holding Bank Hapoalim or give up 4.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Hapoalim vs. Israel Corp
Performance |
| Timeline |
| Bank Hapoalim |
| Israel Corp |
Bank Hapoalim and Israel Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Hapoalim and Israel Corp
The main advantage of trading using opposite Bank Hapoalim and Israel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Hapoalim position performs unexpectedly, Israel Corp 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 Israel Corp will offset losses from the drop in Israel Corp's long position.| Bank Hapoalim vs. Bank Leumi Le Israel | Bank Hapoalim vs. Israel Discount Bank | Bank Hapoalim vs. Mizrahi Tefahot | Bank Hapoalim vs. Bezeq Israeli Telecommunication |
| Israel Corp vs. Neto ME Holdings | Israel Corp vs. Aryt Industries | Israel Corp vs. Kerur Holdings | Israel Corp vs. Globrands Group |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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