Correlation Between Bank Hapoalim and Shufersal

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

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

Diversification Opportunities for Bank Hapoalim and Shufersal

0.83

Correlation Coefficient

Bank Hapoalim  Shufersal

Very poor diversification

The 3 months correlation between Bank and Shufersal is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bank Hapoalim and Shufersal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shufersal and Bank Hapoalim 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 Hapoalim are associated (or correlated) with Shufersal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shufersal has no effect on the direction of Bank Hapoalim i.e., Bank Hapoalim and Shufersal go up and down completely randomly.

Pair Corralation between Bank Hapoalim and Shufersal

Assuming the 90 days trading horizon Bank Hapoalim is expected to generate 0.98 times more return on investment than Shufersal. However, Bank Hapoalim is 1.02 times less risky than Shufersal. It trades about 0.26 of its potential returns per unit of risk. Shufersal is currently generating about 0.25 per unit of risk. If you would invest  360,941  in Bank Hapoalim on September 5, 2024 and sell it today you would earn a total of  67,259  from holding Bank Hapoalim or generate 18.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.83%
Values	Daily Returns

Bank Hapoalim  vs.  Shufersal

Bank Hapoalim

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Hapoalim are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bank Hapoalim sustained solid returns over the last few months and may actually be approaching a breakup point.

Shufersal

Risk-Adjusted Performance

19 of 100

Solid

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

Pair Trading with Bank Hapoalim and Shufersal

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

The idea behind Bank Hapoalim and Shufersal 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.