Correlation Between Norstar and First International

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

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

Diversification Opportunities for Norstar and First International

0.06

Correlation Coefficient

Norstar  First International

Significant diversification

The 3 months correlation between Norstar and First is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Norstar 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 Norstar 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 Norstar 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 Norstar i.e., Norstar and First International go up and down completely randomly.

Pair Corralation between Norstar and First International

Assuming the 90 days trading horizon Norstar is expected to generate 1.36 times less return on investment than First International. In addition to that, Norstar is 2.21 times more volatile than First International Bank. It trades about 0.1 of its total potential returns per unit of risk. First International Bank is currently generating about 0.3 per unit of volatility. If you would invest  1,981,729  in First International Bank on April 23, 2025 and sell it today you would earn a total of  514,271  from holding First International Bank or generate 25.95% return on investment over 90 days.

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

Norstar  vs.  First International Bank

Norstar

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Norstar are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Norstar sustained solid returns over the last few months and may actually be approaching a breakup point.

First International Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First International Bank are ranked lower than 23 (%) 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.

Pair Trading with Norstar and First International

The main advantage of trading using opposite Norstar and First International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norstar 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 Norstar 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.