Correlation Between Israel Discount and First International

Can any of the company-specific risk be diversified away by investing in both Israel Discount 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 Israel Discount and First International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Israel Discount Bank and First International Bank, you can compare the effects of market volatilities on Israel Discount 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 Israel Discount with a short position of First International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and First International.

Diversification Opportunities for Israel Discount and First International

0.81

Correlation Coefficient

Israel Discount  First International

Very poor diversification

The 3 months correlation between Israel and First is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank 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 Israel Discount 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 Israel Discount Bank 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 Israel Discount i.e., Israel Discount and First International go up and down completely randomly.

Pair Corralation between Israel Discount and First International

Assuming the 90 days trading horizon Israel Discount is expected to generate 1.03 times less return on investment than First International. In addition to that, Israel Discount is 1.36 times more volatile than First International Bank. It trades about 0.08 of its total potential returns per unit of risk. First International Bank is currently generating about 0.11 per unit of volatility. If you would invest  1,738,252  in First International Bank on December 30, 2024 and sell it today you would earn a total of  133,748  from holding First International Bank or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Israel Discount Bank  vs.  First International Bank

Israel Discount Bank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Discount Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Israel Discount may actually be approaching a critical reversion point that can send shares even higher in April 2025.

First International Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First International Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, First International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Israel Discount and First International

The main advantage of trading using opposite Israel Discount and First International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount 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.

The idea behind Israel Discount Bank and First International Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..