Correlation Between Bank Leumi and Mivtach Shamir

Can any of the company-specific risk be diversified away by investing in both Bank Leumi and Mivtach Shamir 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 Mivtach Shamir 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 Mivtach Shamir, you can compare the effects of market volatilities on Bank Leumi and Mivtach Shamir 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 Mivtach Shamir. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Mivtach Shamir.

Diversification Opportunities for Bank Leumi and Mivtach Shamir

0.74

Correlation Coefficient

Bank Leumi  Mivtach Shamir

Poor diversification

The 3 months correlation between Bank and Mivtach is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Mivtach Shamir in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mivtach Shamir 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 Mivtach Shamir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mivtach Shamir has no effect on the direction of Bank Leumi i.e., Bank Leumi and Mivtach Shamir go up and down completely randomly.

Pair Corralation between Bank Leumi and Mivtach Shamir

Assuming the 90 days trading horizon Bank Leumi is expected to generate 2.82 times less return on investment than Mivtach Shamir. But when comparing it to its historical volatility, Bank Leumi Le Israel is 1.44 times less risky than Mivtach Shamir. It trades about 0.06 of its potential returns per unit of risk. Mivtach Shamir is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,816,360  in Mivtach Shamir on September 25, 2024 and sell it today you would earn a total of  62,640  from holding Mivtach Shamir or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

Bank Leumi Le Israel  vs.  Mivtach Shamir

Bank Leumi Le

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Leumi Le Israel are ranked lower than 24 (%) 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.

Mivtach Shamir

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mivtach Shamir are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mivtach Shamir sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Leumi and Mivtach Shamir

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

The idea behind Bank Leumi Le Israel and Mivtach Shamir 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.