Correlation Between Phoenix Holdings and Bank Leumi

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

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

Diversification Opportunities for Phoenix Holdings and Bank Leumi

0.24

Correlation Coefficient

Phoenix Holdings  Bank Leumi

Modest diversification

The 3 months correlation between Phoenix and Bank is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding The Phoenix Holdings and Bank Leumi Le Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Leumi Le and Phoenix Holdings 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 The Phoenix Holdings are associated (or correlated) with Bank Leumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Leumi Le has no effect on the direction of Phoenix Holdings i.e., Phoenix Holdings and Bank Leumi go up and down completely randomly.

Pair Corralation between Phoenix Holdings and Bank Leumi

Assuming the 90 days trading horizon The Phoenix Holdings is expected to under-perform the Bank Leumi. But the stock apears to be less risky and, when comparing its historical volatility, The Phoenix Holdings is 1.45 times less risky than Bank Leumi. The stock trades about -0.23 of its potential returns per unit of risk. The Bank Leumi Le Israel is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  307,000  in Bank Leumi Le Israel on February 1, 2024 and sell it today you would lose (14,000) from holding Bank Leumi Le Israel or give up 4.56% of portfolio value over 90 days.

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

The Phoenix Holdings  vs.  Bank Leumi Le Israel

Phoenix Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Phoenix Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Phoenix Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bank Leumi Le

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Bank Leumi Le Israel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Bank Leumi may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Phoenix Holdings and Bank Leumi

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

The idea behind The Phoenix Holdings and Bank Leumi Le Israel 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.