Correlation Between Electra and First International
Can any of the company-specific risk be diversified away by investing in both Electra and First International 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 Electra and First International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electra and First International Bank, you can compare the effects of market volatilities on Electra and First International 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 Electra with a short position of First International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra and First International.
Diversification Opportunities for Electra and First International
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Electra and First is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Electra and First International Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First International Bank and Electra 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 Electra are associated (or correlated) with First International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First International Bank has no effect on the direction of Electra i.e., Electra and First International go up and down completely randomly.
Pair Corralation between Electra and First International
Assuming the 90 days trading horizon Electra is expected to generate 1.3 times more return on investment than First International. However, Electra is 1.3 times more volatile than First International Bank. It trades about 0.09 of its potential returns per unit of risk. First International Bank is currently generating about 0.07 per unit of risk. If you would invest 13,668,100 in Electra on September 1, 2024 and sell it today you would earn a total of 5,674,900 from holding Electra or generate 41.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electra vs. First International Bank
Performance |
| Timeline |
| Electra |
| First International Bank |
Electra and First International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electra and First International
The main advantage of trading using opposite Electra and First International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra position performs unexpectedly, First International 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 First International will offset losses from the drop in First International's long position.| Electra vs. Alony Hetz Properties | Electra vs. Melisron | Electra vs. Shufersal | Electra vs. Israel Discount Bank |
| First International vs. Israel Discount Bank | First International vs. Mizrahi Tefahot | First International vs. Bank Leumi Le Israel | First International vs. Bank Hapoalim |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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