Correlation Between First International and Azrieli
Can any of the company-specific risk be diversified away by investing in both First International and Azrieli 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 Azrieli 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 Azrieli Group, you can compare the effects of market volatilities on First International and Azrieli 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 Azrieli. Check out your portfolio center. Please also check ongoing floating volatility patterns of First International and Azrieli.
Diversification Opportunities for First International and Azrieli
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Azrieli is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding First International Bank and Azrieli Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azrieli Group 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 Azrieli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azrieli Group has no effect on the direction of First International i.e., First International and Azrieli go up and down completely randomly.
Pair Corralation between First International and Azrieli
Assuming the 90 days trading horizon First International Bank is expected to under-perform the Azrieli. In addition to that, First International is 1.18 times more volatile than Azrieli Group. It trades about -0.21 of its total potential returns per unit of risk. Azrieli Group is currently generating about -0.14 per unit of volatility. If you would invest 2,504,287 in Azrieli Group on January 18, 2024 and sell it today you would lose (134,287) from holding Azrieli Group or give up 5.36% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
First International Bank vs. Azrieli Group
Performance |
Timeline |
First International Bank |
Azrieli Group |
First International and Azrieli Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First International and Azrieli
The main advantage of trading using opposite First International and Azrieli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First International position performs unexpectedly, Azrieli 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 Azrieli will offset losses from the drop in Azrieli'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 |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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