Correlation Between First Internet and Azure Power

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

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

Diversification Opportunities for First Internet and Azure Power

-0.39

Correlation Coefficient

First Internet  Azure Power

Very good diversification

The 3 months correlation between First and Azure is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding First Internet Bancorp and Azure Power Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azure Power Global and First Internet 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 Internet Bancorp are associated (or correlated) with Azure Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azure Power Global has no effect on the direction of First Internet i.e., First Internet and Azure Power go up and down completely randomly.

Pair Corralation between First Internet and Azure Power

Given the investment horizon of 90 days First Internet Bancorp is expected to generate 0.13 times more return on investment than Azure Power. However, First Internet Bancorp is 7.81 times less risky than Azure Power. It trades about -0.02 of its potential returns per unit of risk. Azure Power Global is currently generating about -0.01 per unit of risk. If you would invest  2,318  in First Internet Bancorp on May 9, 2025 and sell it today you would lose (133.00) from holding First Internet Bancorp or give up 5.74% of portfolio value over 90 days.

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

First Internet Bancorp  vs.  Azure Power Global

First Internet Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days First Internet Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, First Internet is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Azure Power Global

Risk-Adjusted Performance

Mild

Over the last 90 days Azure Power Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with First Internet and Azure Power

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

The idea behind First Internet Bancorp and Azure Power Global 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.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.