Correlation Between First International and GODM Investments
Can any of the company-specific risk be diversified away by investing in both First International and GODM Investments 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 GODM Investments 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 GODM Investments, you can compare the effects of market volatilities on First International and GODM Investments 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 GODM Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of First International and GODM Investments.
Diversification Opportunities for First International and GODM Investments
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and GODM is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding First International Bank and GODM Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GODM Investments 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 GODM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GODM Investments has no effect on the direction of First International i.e., First International and GODM Investments go up and down completely randomly.
Pair Corralation between First International and GODM Investments
Assuming the 90 days trading horizon First International Bank is expected to generate 0.46 times more return on investment than GODM Investments. However, First International Bank is 2.19 times less risky than GODM Investments. It trades about 0.16 of its potential returns per unit of risk. GODM Investments is currently generating about -0.27 per unit of risk. If you would invest 1,663,000 in First International Bank on September 3, 2024 and sell it today you would earn a total of 49,000 from holding First International Bank or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First International Bank vs. GODM Investments
Performance |
| Timeline |
| First International Bank |
| GODM Investments |
First International and GODM Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First International and GODM Investments
The main advantage of trading using opposite First International and GODM Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First International position performs unexpectedly, GODM Investments 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 GODM Investments will offset losses from the drop in GODM Investments' 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 |
| GODM Investments vs. Bank Hapoalim | GODM Investments vs. Israel Discount Bank | GODM Investments vs. First International Bank | GODM Investments vs. Elbit Systems |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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