Correlation Between Bank Leumi and Mivne Real

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

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

Diversification Opportunities for Bank Leumi and Mivne Real

0.97

Correlation Coefficient

Bank Leumi  Mivne Real

Almost no diversification

The 3 months correlation between Bank and Mivne is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Mivne Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mivne Real Estate and Bank Leumi 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 Leumi Le Israel are associated (or correlated) with Mivne Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mivne Real Estate has no effect on the direction of Bank Leumi i.e., Bank Leumi and Mivne Real go up and down completely randomly.

Pair Corralation between Bank Leumi and Mivne Real

Assuming the 90 days trading horizon Bank Leumi is expected to generate 1.04 times less return on investment than Mivne Real. But when comparing it to its historical volatility, Bank Leumi Le Israel is 1.14 times less risky than Mivne Real. It trades about 0.22 of its potential returns per unit of risk. Mivne Real Estate is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  95,400  in Mivne Real Estate on September 29, 2024 and sell it today you would earn a total of  15,300  from holding Mivne Real Estate or generate 16.04% return on investment over 90 days.

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

Bank Leumi Le Israel  vs.  Mivne Real Estate

Bank Leumi Le

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Leumi Le Israel are ranked lower than 17 (%) 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.

Mivne Real Estate

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mivne Real Estate are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mivne Real sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Leumi and Mivne Real

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

The idea behind Bank Leumi Le Israel and Mivne Real Estate 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.