Correlation Between First International and Jerusalem
Can any of the company-specific risk be diversified away by investing in both First International and Jerusalem 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 Jerusalem 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 Jerusalem, you can compare the effects of market volatilities on First International and Jerusalem 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 Jerusalem. Check out your portfolio center. Please also check ongoing floating volatility patterns of First International and Jerusalem.
Diversification Opportunities for First International and Jerusalem
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Jerusalem is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding First International Bank and Jerusalem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jerusalem 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 Jerusalem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jerusalem has no effect on the direction of First International i.e., First International and Jerusalem go up and down completely randomly.
Pair Corralation between First International and Jerusalem
Assuming the 90 days trading horizon First International is expected to generate 1.74 times less return on investment than Jerusalem. In addition to that, First International is 1.44 times more volatile than Jerusalem. It trades about 0.04 of its total potential returns per unit of risk. Jerusalem is currently generating about 0.1 per unit of volatility. If you would invest 126,004 in Jerusalem on January 20, 2024 and sell it today you would earn a total of 9,296 from holding Jerusalem or generate 7.38% 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. Jerusalem
Performance |
| Timeline |
| First International Bank |
| Jerusalem |
First International and Jerusalem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First International and Jerusalem
The main advantage of trading using opposite First International and Jerusalem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First International position performs unexpectedly, Jerusalem 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 Jerusalem will offset losses from the drop in Jerusalem's long position.| First International vs. Rani Zim Shopping | First International vs. Accel Solutions Group | First International vs. Rapac Communication Infrastructure |
| Jerusalem vs. Rani Zim Shopping | Jerusalem vs. Accel Solutions Group | Jerusalem vs. Rapac Communication Infrastructure |
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 Stocks Directory module to find actively traded stocks across global markets.
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