Correlation Between Bank Leumi and Infimer

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

Diversification Opportunities for Bank Leumi and Infimer

0.3

Correlation Coefficient

Bank Leumi  Infimer

Weak diversification

The 3 months correlation between Bank and Infimer is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Infimer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infimer 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 Infimer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infimer has no effect on the direction of Bank Leumi i.e., Bank Leumi and Infimer go up and down completely randomly.

Pair Corralation between Bank Leumi and Infimer

Assuming the 90 days trading horizon Bank Leumi is expected to generate 3.31 times less return on investment than Infimer. But when comparing it to its historical volatility, Bank Leumi Le Israel is 12.43 times less risky than Infimer. It trades about 0.25 of its potential returns per unit of risk. Infimer is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9,637  in Infimer on December 30, 2024 and sell it today you would lose (635.00) from holding Infimer or give up 6.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.62%
Values	Daily Returns

Bank Leumi Le Israel  vs.  Infimer

Bank Leumi Le

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Leumi Le Israel are ranked lower than 19 (%) 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.

Infimer

Risk-Adjusted Performance

Modest

Over the last 90 days Infimer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak technical and fundamental indicators, Infimer sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Leumi and Infimer

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

The idea behind Bank Leumi Le Israel and Infimer 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.