Correlation Between IES Holdings and First International

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

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

Diversification Opportunities for IES Holdings and First International

-0.24

Correlation Coefficient

IES Holdings  First International

Very good diversification

The 3 months correlation between IES and First is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding IES Holdings 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 IES Holdings 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 IES Holdings 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 IES Holdings i.e., IES Holdings and First International go up and down completely randomly.

Pair Corralation between IES Holdings and First International

Assuming the 90 days trading horizon IES Holdings is expected to under-perform the First International. In addition to that, IES Holdings is 1.18 times more volatile than First International Bank. It trades about -0.19 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

IES Holdings  vs.  First International Bank

IES Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days IES Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 IES Holdings and First International

The main advantage of trading using opposite IES Holdings and First International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IES Holdings 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 IES Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.