Correlation Between Bank Hapoalim and Analyst IMS

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

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

Diversification Opportunities for Bank Hapoalim and Analyst IMS

0.96

Correlation Coefficient

Bank Hapoalim  Analyst IMS

Almost no diversification

The 3 months correlation between Bank and Analyst is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Bank Hapoalim and Analyst IMS Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analyst IMS Investment 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 Analyst IMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analyst IMS Investment has no effect on the direction of Bank Hapoalim i.e., Bank Hapoalim and Analyst IMS go up and down completely randomly.

Pair Corralation between Bank Hapoalim and Analyst IMS

Assuming the 90 days trading horizon Bank Hapoalim is expected to generate 2.81 times less return on investment than Analyst IMS. But when comparing it to its historical volatility, Bank Hapoalim is 1.29 times less risky than Analyst IMS. It trades about 0.22 of its potential returns per unit of risk. Analyst IMS Investment is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest  579,900  in Analyst IMS Investment on December 30, 2024 and sell it today you would earn a total of  340,100  from holding Analyst IMS Investment or generate 58.65% return on investment over 90 days.

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

Bank Hapoalim  vs.  Analyst IMS Investment

Bank Hapoalim

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Hapoalim are ranked lower than 17 (%) 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.

Analyst IMS Investment

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Analyst IMS Investment are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Analyst IMS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Hapoalim and Analyst IMS

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

The idea behind Bank Hapoalim and Analyst IMS Investment 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.