Correlation Between Payment Financial and First International
Can any of the company-specific risk be diversified away by investing in both Payment Financial and First International 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 Payment Financial and First International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payment Financial Technologies and First International Bank, you can compare the effects of market volatilities on Payment Financial and First International 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 Payment Financial with a short position of First International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payment Financial and First International.
Diversification Opportunities for Payment Financial and First International
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Payment and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Payment Financial Technologies and First International Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First International Bank and Payment Financial 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 Payment Financial Technologies are associated (or correlated) with First International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First International Bank has no effect on the direction of Payment Financial i.e., Payment Financial and First International go up and down completely randomly.
Pair Corralation between Payment Financial and First International
Assuming the 90 days trading horizon Payment Financial Technologies is expected to generate 3.99 times more return on investment than First International. However, Payment Financial is 3.99 times more volatile than First International Bank. It trades about 0.46 of its potential returns per unit of risk. First International Bank is currently generating about 0.56 per unit of risk. If you would invest 32,210 in Payment Financial Technologies on October 23, 2024 and sell it today you would earn a total of 11,790 from holding Payment Financial Technologies or generate 36.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.12% |
| Values | Daily Returns |
Payment Financial Technologies vs. First International Bank
Performance |
| Timeline |
| Payment Financial |
| First International Bank |
Payment Financial and First International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payment Financial and First International
The main advantage of trading using opposite Payment Financial and First International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payment Financial position performs unexpectedly, First International 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 First International will offset losses from the drop in First International's long position.| Payment Financial vs. Meitav Dash Investments | Payment Financial vs. Clal Biotechnology Industries | Payment Financial vs. Amot Investments | Payment Financial vs. YD More Investments |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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