Correlation Between First International and Trendline
Can any of the company-specific risk be diversified away by investing in both First International and Trendline 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 Trendline 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 Trendline, you can compare the effects of market volatilities on First International and Trendline 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 Trendline. Check out your portfolio center. Please also check ongoing floating volatility patterns of First International and Trendline.
Diversification Opportunities for First International and Trendline
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Trendline is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding First International Bank and Trendline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trendline 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 Trendline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trendline has no effect on the direction of First International i.e., First International and Trendline go up and down completely randomly.
Pair Corralation between First International and Trendline
Assuming the 90 days trading horizon First International Bank is expected to generate 0.91 times more return on investment than Trendline. However, First International Bank is 1.09 times less risky than Trendline. It trades about 0.08 of its potential returns per unit of risk. Trendline is currently generating about -0.02 per unit of risk. If you would invest 1,373,946 in First International Bank on September 2, 2024 and sell it today you would earn a total of 338,054 from holding First International Bank or generate 24.6% 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. Trendline
Performance |
| Timeline |
| First International Bank |
| Trendline |
First International and Trendline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First International and Trendline
The main advantage of trading using opposite First International and Trendline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First International position performs unexpectedly, Trendline 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 Trendline will offset losses from the drop in Trendline's 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 |
| Trendline vs. Suny Cellular Communication | Trendline vs. Adgar Investments and | Trendline vs. Discount Investment Corp | Trendline vs. Bezeq Israeli Telecommunication |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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