Correlation Between First International and Retailors
Can any of the company-specific risk be diversified away by investing in both First International and Retailors 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 Retailors 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 Retailors, you can compare the effects of market volatilities on First International and Retailors 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 Retailors. Check out your portfolio center. Please also check ongoing floating volatility patterns of First International and Retailors.
Diversification Opportunities for First International and Retailors
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Retailors is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding First International Bank and Retailors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retailors 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 Retailors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retailors has no effect on the direction of First International i.e., First International and Retailors go up and down completely randomly.
Pair Corralation between First International and Retailors
Assuming the 90 days trading horizon First International Bank is expected to generate 0.38 times more return on investment than Retailors. However, First International Bank is 2.65 times less risky than Retailors. It trades about 0.38 of its potential returns per unit of risk. Retailors is currently generating about 0.1 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First International Bank vs. Retailors
Performance |
| Timeline |
| First International Bank |
| Retailors |
First International and Retailors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First International and Retailors
The main advantage of trading using opposite First International and Retailors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First International position performs unexpectedly, Retailors 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 Retailors will offset losses from the drop in Retailors' long position.| First International vs. Bank Hapoalim | First International vs. Israel Discount Bank | First International vs. Mizrahi Tefahot | First International vs. Bezeq Israeli Telecommunication |
| Retailors vs. Nice | Retailors vs. The Gold Bond | Retailors vs. Bank Leumi Le Israel | Retailors 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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