Correlation Between Eldav L and Bank Hapoalim

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

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

Diversification Opportunities for Eldav L and Bank Hapoalim

0.65

Correlation Coefficient

Eldav L  Bank Hapoalim

Poor diversification

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

Pair Corralation between Eldav L and Bank Hapoalim

Assuming the 90 days trading horizon Eldav L is expected to under-perform the Bank Hapoalim. In addition to that, Eldav L is 2.17 times more volatile than Bank Hapoalim. It trades about -0.01 of its total potential returns per unit of risk. Bank Hapoalim is currently generating about 0.35 per unit of volatility. If you would invest  348,454  in Bank Hapoalim on September 18, 2024 and sell it today you would earn a total of  84,646  from holding Bank Hapoalim or generate 24.29% return on investment over 90 days.

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

Eldav L  vs.  Bank Hapoalim

Eldav L

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eldav L has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Eldav L is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Bank Hapoalim

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Hapoalim are ranked lower than 27 (%) 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.

Pair Trading with Eldav L and Bank Hapoalim

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

The idea behind Eldav L and Bank Hapoalim 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.