Correlation Between First International and Global Knafaim
Can any of the company-specific risk be diversified away by investing in both First International and Global Knafaim 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 Global Knafaim 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 Global Knafaim Leasing, you can compare the effects of market volatilities on First International and Global Knafaim 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 Global Knafaim. Check out your portfolio center. Please also check ongoing floating volatility patterns of First International and Global Knafaim.
Diversification Opportunities for First International and Global Knafaim
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Global is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding First International Bank and Global Knafaim Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Knafaim Leasing 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 Global Knafaim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Knafaim Leasing has no effect on the direction of First International i.e., First International and Global Knafaim go up and down completely randomly.
Pair Corralation between First International and Global Knafaim
Assuming the 90 days trading horizon First International Bank is expected to generate 0.53 times more return on investment than Global Knafaim. However, First International Bank is 1.88 times less risky than Global Knafaim. It trades about 0.38 of its potential returns per unit of risk. Global Knafaim Leasing is currently generating about -0.09 per unit of risk. If you would invest 1,609,000 in First International Bank on August 25, 2024 and sell it today you would earn a total of 106,000 from holding First International Bank or generate 6.59% 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. Global Knafaim Leasing
Performance |
| Timeline |
| First International Bank |
| Global Knafaim Leasing |
First International and Global Knafaim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First International and Global Knafaim
The main advantage of trading using opposite First International and Global Knafaim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First International position performs unexpectedly, Global Knafaim 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 Global Knafaim will offset losses from the drop in Global Knafaim's long position.| First International vs. Bank Hapoalim | First International vs. Israel Discount Bank | First International vs. Mizrahi Tefahot | First International vs. Bezeq Israeli Telecommunication |
| Global Knafaim vs. Arad | Global Knafaim vs. Alony Hetz Properties | Global Knafaim vs. Danel | Global Knafaim vs. Airport City |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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