Correlation Between Bank Leumi and Nice

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

Diversification Opportunities for Bank Leumi and Nice

-0.67

Correlation Coefficient

Bank Leumi  Nice

Excellent diversification

The 3 months correlation between Bank and Nice is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le Israel and Nice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice 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 Nice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice has no effect on the direction of Bank Leumi i.e., Bank Leumi and Nice go up and down completely randomly.

Pair Corralation between Bank Leumi and Nice

Assuming the 90 days trading horizon Bank Leumi Le Israel is expected to generate 0.31 times more return on investment than Nice. However, Bank Leumi Le Israel is 3.19 times less risky than Nice. It trades about 0.3 of its potential returns per unit of risk. Nice is currently generating about -0.16 per unit of risk. If you would invest  444,200  in Bank Leumi Le Israel on November 29, 2024 and sell it today you would earn a total of  30,800  from holding Bank Leumi Le Israel or generate 6.93% return on investment over 90 days.

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

Bank Leumi Le Israel  vs.  Nice

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 14 (%) 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.

Nice

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nice has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bank Leumi and Nice

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

The idea behind Bank Leumi Le Israel and Nice 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.