Correlation Between First International and Export Inv

Can any of the company-specific risk be diversified away by investing in both First International and Export Inv 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 Export Inv 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 Export Inv, you can compare the effects of market volatilities on First International and Export Inv 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 Export Inv. Check out your portfolio center. Please also check ongoing floating volatility patterns of First International and Export Inv.

Diversification Opportunities for First International and Export Inv

0.76

Correlation Coefficient

First International  Export Inv

Poor diversification

The 3 months correlation between First and Export is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding First International Bank and Export Inv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Export Inv 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 Export Inv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Export Inv has no effect on the direction of First International i.e., First International and Export Inv go up and down completely randomly.

Pair Corralation between First International and Export Inv

Assuming the 90 days trading horizon First International Bank is expected to generate 0.48 times more return on investment than Export Inv. However, First International Bank is 2.09 times less risky than Export Inv. It trades about 0.46 of its potential returns per unit of risk. Export Inv is currently generating about -0.09 per unit of risk. If you would invest  1,765,000  in First International Bank on October 26, 2024 and sell it today you would earn a total of  155,000  from holding First International Bank or generate 8.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

First International Bank  vs.  Export Inv

First International Bank

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in First International Bank are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, First International sustained solid returns over the last few months and may actually be approaching a breakup point.

Export Inv

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Export Inv are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Export Inv sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First International and Export Inv

The main advantage of trading using opposite First International and Export Inv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First International position performs unexpectedly, Export Inv 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 Export Inv will offset losses from the drop in Export Inv's long position.

The idea behind First International Bank and Export Inv 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.