Correlation Between Bank Hapoalim and Jerusalem
Can any of the company-specific risk be diversified away by investing in both Bank Hapoalim and Jerusalem 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 Jerusalem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Hapoalim and Jerusalem, you can compare the effects of market volatilities on Bank Hapoalim and Jerusalem 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 Jerusalem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Hapoalim and Jerusalem.
Diversification Opportunities for Bank Hapoalim and Jerusalem
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Jerusalem is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank Hapoalim and Jerusalem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jerusalem 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 Jerusalem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jerusalem has no effect on the direction of Bank Hapoalim i.e., Bank Hapoalim and Jerusalem go up and down completely randomly.
Pair Corralation between Bank Hapoalim and Jerusalem
Assuming the 90 days trading horizon Bank Hapoalim is expected to generate 1.43 times less return on investment than Jerusalem. In addition to that, Bank Hapoalim is 1.11 times more volatile than Jerusalem. It trades about 0.04 of its total potential returns per unit of risk. Jerusalem is currently generating about 0.06 per unit of volatility. If you would invest 96,394 in Jerusalem on January 24, 2024 and sell it today you would earn a total of 38,906 from holding Jerusalem or generate 40.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Hapoalim vs. Jerusalem
Performance |
| Timeline |
| Bank Hapoalim |
| Jerusalem |
Bank Hapoalim and Jerusalem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Hapoalim and Jerusalem
The main advantage of trading using opposite Bank Hapoalim and Jerusalem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Hapoalim position performs unexpectedly, Jerusalem 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 Jerusalem will offset losses from the drop in Jerusalem'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 |
| Jerusalem vs. Mizrahi Tefahot | Jerusalem vs. First International Bank | Jerusalem vs. Israel Discount Bank | Jerusalem vs. Bank Leumi Le Israel |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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