Correlation Between Internet Gold and Bank Leumi

Can any of the company-specific risk be diversified away by investing in both Internet Gold 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 Internet Gold and Bank Leumi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Internet Gold Golden and Bank Leumi Le Israel, you can compare the effects of market volatilities on Internet Gold 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 Internet Gold with a short position of Bank Leumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Internet Gold and Bank Leumi.

Diversification Opportunities for Internet Gold and Bank Leumi

-0.58

Correlation Coefficient

Internet Gold  Bank Leumi

Excellent diversification

The 3 months correlation between Internet and Bank is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Internet Gold Golden 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 Internet Gold 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 Internet Gold Golden 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 Internet Gold i.e., Internet Gold and Bank Leumi go up and down completely randomly.

Pair Corralation between Internet Gold and Bank Leumi

Assuming the 90 days trading horizon Internet Gold Golden is expected to under-perform the Bank Leumi. In addition to that, Internet Gold is 5.36 times more volatile than Bank Leumi Le Israel. It trades about -0.13 of its total potential returns per unit of risk. Bank Leumi Le Israel is currently generating about 0.25 per unit of volatility. If you would invest  345,487  in Bank Leumi Le Israel on September 1, 2024 and sell it today you would earn a total of  67,513  from holding Bank Leumi Le Israel or generate 19.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Internet Gold Golden  vs.  Bank Leumi Le Israel

Internet Gold Golden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Internet Gold Golden has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Bank Leumi Le

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Leumi Le Israel are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bank Leumi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Internet Gold and Bank Leumi

The main advantage of trading using opposite Internet Gold and Bank Leumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Internet Gold 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 Internet Gold Golden 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.