Correlation Between Merchants Marine and Bank Leumi

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

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

Diversification Opportunities for Merchants Marine and Bank Leumi

-0.06

Correlation Coefficient

Merchants Marine  Bank Leumi

Good diversification

The 3 months correlation between Merchants and Bank is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Merchants Marine Bancorp and Bank Leumi Le in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Leumi Le and Merchants Marine 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 Merchants Marine Bancorp 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 Merchants Marine i.e., Merchants Marine and Bank Leumi go up and down completely randomly.

Pair Corralation between Merchants Marine and Bank Leumi

If you would invest  4,295  in Merchants Marine Bancorp on September 12, 2024 and sell it today you would earn a total of  55.00  from holding Merchants Marine Bancorp or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Merchants Marine Bancorp  vs.  Bank Leumi Le

Merchants Marine Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Merchants Marine Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Merchants Marine is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bank Leumi Le

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Leumi Le has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Bank Leumi is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Merchants Marine and Bank Leumi

The main advantage of trading using opposite Merchants Marine and Bank Leumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchants Marine 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 Merchants Marine Bancorp and Bank Leumi Le 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.