Correlation Between First International and IBI Inv
Can any of the company-specific risk be diversified away by investing in both First International and IBI Inv 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 IBI Inv 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 IBI Inv House, you can compare the effects of market volatilities on First International and IBI Inv 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 IBI Inv. Check out your portfolio center. Please also check ongoing floating volatility patterns of First International and IBI Inv.
Diversification Opportunities for First International and IBI Inv
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and IBI is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding First International Bank and IBI Inv House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBI Inv House 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 IBI Inv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBI Inv House has no effect on the direction of First International i.e., First International and IBI Inv go up and down completely randomly.
Pair Corralation between First International and IBI Inv
Assuming the 90 days trading horizon First International is expected to generate 2.64 times less return on investment than IBI Inv. But when comparing it to its historical volatility, First International Bank is 1.18 times less risky than IBI Inv. It trades about 0.04 of its potential returns per unit of risk. IBI Inv House is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 733,158 in IBI Inv House on August 24, 2024 and sell it today you would earn a total of 802,842 from holding IBI Inv House or generate 109.5% 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. IBI Inv House
Performance |
| Timeline |
| First International Bank |
| IBI Inv House |
First International and IBI Inv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First International and IBI Inv
The main advantage of trading using opposite First International and IBI Inv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First International position performs unexpectedly, IBI Inv 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 IBI Inv will offset losses from the drop in IBI Inv'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 |
| IBI Inv vs. Homebiogas | IBI Inv vs. Batm Advanced Communications | IBI Inv vs. Gamatronic Electronic Industries | IBI Inv vs. Victory Supermarket Chain |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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