Correlation Between FIBI Holdings and Nextcom
Can any of the company-specific risk be diversified away by investing in both FIBI Holdings and Nextcom 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 FIBI Holdings and Nextcom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIBI Holdings and Nextcom, you can compare the effects of market volatilities on FIBI Holdings and Nextcom 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 FIBI Holdings with a short position of Nextcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIBI Holdings and Nextcom.
Diversification Opportunities for FIBI Holdings and Nextcom
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FIBI and Nextcom is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding FIBI Holdings and Nextcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextcom and FIBI Holdings 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 FIBI Holdings are associated (or correlated) with Nextcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextcom has no effect on the direction of FIBI Holdings i.e., FIBI Holdings and Nextcom go up and down completely randomly.
Pair Corralation between FIBI Holdings and Nextcom
Assuming the 90 days trading horizon FIBI Holdings is expected to generate 0.62 times more return on investment than Nextcom. However, FIBI Holdings is 1.61 times less risky than Nextcom. It trades about 0.06 of its potential returns per unit of risk. Nextcom is currently generating about 0.03 per unit of risk. If you would invest 1,397,033 in FIBI Holdings on August 31, 2024 and sell it today you would earn a total of 391,967 from holding FIBI Holdings or generate 28.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.66% |
| Values | Daily Returns |
FIBI Holdings vs. Nextcom
Performance |
| Timeline |
| FIBI Holdings |
| Nextcom |
FIBI Holdings and Nextcom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIBI Holdings and Nextcom
The main advantage of trading using opposite FIBI Holdings and Nextcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIBI Holdings position performs unexpectedly, Nextcom 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 Nextcom will offset losses from the drop in Nextcom's long position.| FIBI Holdings vs. First International Bank | FIBI Holdings vs. Mizrahi Tefahot | FIBI Holdings vs. Israel Discount Bank | FIBI Holdings vs. Bank Leumi Le Israel |
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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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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