Correlation Between Israel Land and Harel Sal

Can any of the company-specific risk be diversified away by investing in both Israel Land and Harel Sal 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 Israel Land and Harel Sal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Israel Land Development and Harel Sal SP, you can compare the effects of market volatilities on Israel Land and Harel Sal 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 Israel Land with a short position of Harel Sal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Land and Harel Sal.

Diversification Opportunities for Israel Land and Harel Sal

0.65

Correlation Coefficient

Israel Land  Harel Sal

Poor diversification

The 3 months correlation between Israel and Harel is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Israel Land Development and Harel Sal SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harel Sal SP and Israel Land 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 Israel Land Development are associated (or correlated) with Harel Sal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harel Sal SP has no effect on the direction of Israel Land i.e., Israel Land and Harel Sal go up and down completely randomly.

Pair Corralation between Israel Land and Harel Sal

Assuming the 90 days trading horizon Israel Land Development is expected to generate 3.81 times more return on investment than Harel Sal. However, Israel Land is 3.81 times more volatile than Harel Sal SP. It trades about 0.16 of its potential returns per unit of risk. Harel Sal SP is currently generating about 0.22 per unit of risk. If you would invest  68,500  in Israel Land Development on September 16, 2024 and sell it today you would earn a total of  13,700  from holding Israel Land Development or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Israel Land Development  vs.  Harel Sal SP

Israel Land Development

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Land Development are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Israel Land sustained solid returns over the last few months and may actually be approaching a breakup point.

Harel Sal SP

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Harel Sal SP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harel Sal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Israel Land and Harel Sal

The main advantage of trading using opposite Israel Land and Harel Sal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Land position performs unexpectedly, Harel Sal 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 Harel Sal will offset losses from the drop in Harel Sal's long position.

The idea behind Israel Land Development and Harel Sal SP 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 Global Correlations module to find global opportunities by holding instruments from different markets.