Correlation Between Absa Group and First National
Can any of the company-specific risk be diversified away by investing in both Absa Group and First National 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 Absa Group and First National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absa Group Limited and First National Bank, you can compare the effects of market volatilities on Absa Group and First National 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 Absa Group with a short position of First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absa Group and First National.
Diversification Opportunities for Absa Group and First National
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Absa and First is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Absa Group Limited and First National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Bank and Absa Group 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 Absa Group Limited are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Bank has no effect on the direction of Absa Group i.e., Absa Group and First National go up and down completely randomly.
Pair Corralation between Absa Group and First National
If you would invest 22,778 in First National Bank on September 14, 2024 and sell it today you would earn a total of 222.00 from holding First National Bank or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absa Group Limited vs. First National Bank
Performance |
| Timeline |
| Absa Group Limited |
| First National Bank |
Absa Group and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absa Group and First National
The main advantage of trading using opposite Absa Group and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absa Group position performs unexpectedly, First National 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 National will offset losses from the drop in First National's long position.| Absa Group vs. PT Bank Rakyat | Absa Group vs. Morningstar Unconstrained Allocation | Absa Group vs. Bondbloxx ETF Trust | Absa Group vs. Spring Valley Acquisition |
| First National vs. IF Bancorp | First National vs. LINKBANCORP | First National vs. Pathfinder Bancorp | First National vs. First Keystone Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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