Correlation Between First International and Direct Capital
Can any of the company-specific risk be diversified away by investing in both First International and Direct Capital 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 Direct Capital 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 Direct Capital Investments, you can compare the effects of market volatilities on First International and Direct Capital 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 Direct Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of First International and Direct Capital.
Diversification Opportunities for First International and Direct Capital
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Direct is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding First International Bank and Direct Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Capital Inves 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 Direct Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Capital Inves has no effect on the direction of First International i.e., First International and Direct Capital go up and down completely randomly.
Pair Corralation between First International and Direct Capital
Assuming the 90 days trading horizon First International Bank is expected to generate 0.17 times more return on investment than Direct Capital. However, First International Bank is 5.73 times less risky than Direct Capital. It trades about 0.25 of its potential returns per unit of risk. Direct Capital Investments is currently generating about -0.06 per unit of risk. If you would invest 1,493,000 in First International Bank on August 29, 2024 and sell it today you would earn a total of 263,000 from holding First International Bank or generate 17.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.83% |
| Values | Daily Returns |
First International Bank vs. Direct Capital Investments
Performance |
| Timeline |
| First International Bank |
| Direct Capital Inves |
First International and Direct Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First International and Direct Capital
The main advantage of trading using opposite First International and Direct Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First International position performs unexpectedly, Direct Capital 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 Direct Capital will offset losses from the drop in Direct Capital's long position.| First International vs. Elbit Systems | First International vs. Discount Investment Corp | First International vs. Clal Insurance Enterprises | First International vs. AudioCodes |
| Direct Capital vs. Nice | Direct Capital vs. The Gold Bond | Direct Capital vs. Bank Leumi Le Israel | Direct Capital vs. ICL Israel Chemicals |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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