Correlation Between First International and Brainsway
Can any of the company-specific risk be diversified away by investing in both First International and Brainsway 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 First International and Brainsway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First International Bank and Brainsway, you can compare the effects of market volatilities on First International and Brainsway 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 First International with a short position of Brainsway. Check out your portfolio center. Please also check ongoing floating volatility patterns of First International and Brainsway.
Diversification Opportunities for First International and Brainsway
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Brainsway is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding First International Bank and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway and First International 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 First International Bank are associated (or correlated) with Brainsway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainsway has no effect on the direction of First International i.e., First International and Brainsway go up and down completely randomly.
Pair Corralation between First International and Brainsway
Assuming the 90 days trading horizon First International is expected to generate 3.74 times less return on investment than Brainsway. But when comparing it to its historical volatility, First International Bank is 2.3 times less risky than Brainsway. It trades about 0.07 of its potential returns per unit of risk. Brainsway is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 84,000 in Brainsway on September 1, 2024 and sell it today you would earn a total of 92,100 from holding Brainsway or generate 109.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First International Bank vs. Brainsway
Performance |
| Timeline |
| First International Bank |
| Brainsway |
First International and Brainsway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First International and Brainsway
The main advantage of trading using opposite First International and Brainsway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First International position performs unexpectedly, Brainsway 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 Brainsway will offset losses from the drop in Brainsway's long position.| First International vs. Israel Discount Bank | First International vs. Mizrahi Tefahot | First International vs. Bank Leumi Le Israel | First International vs. Bank Hapoalim |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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