Correlation Between AKITA Drilling and First National
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling 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 AKITA Drilling and First National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and First National Financial, you can compare the effects of market volatilities on AKITA Drilling 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 AKITA Drilling with a short position of First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and First National.
Diversification Opportunities for AKITA Drilling and First National
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AKITA and First is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Financial and AKITA Drilling 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 AKITA Drilling 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 Financial has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and First National go up and down completely randomly.
Pair Corralation between AKITA Drilling and First National
Assuming the 90 days trading horizon AKITA Drilling is expected to generate 1.93 times less return on investment than First National. In addition to that, AKITA Drilling is 3.44 times more volatile than First National Financial. It trades about 0.01 of its total potential returns per unit of risk. First National Financial is currently generating about 0.07 per unit of volatility. If you would invest 1,094 in First National Financial on September 1, 2024 and sell it today you would earn a total of 386.00 from holding First National Financial or generate 35.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKITA Drilling vs. First National Financial
Performance |
| Timeline |
| AKITA Drilling |
| First National Financial |
AKITA Drilling and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and First National
The main advantage of trading using opposite AKITA Drilling and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling 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.| AKITA Drilling vs. Ensign Energy Services | AKITA Drilling vs. Total Energy Services | AKITA Drilling vs. PHX Energy Services | AKITA Drilling vs. Western Energy Services |
| First National vs. Champion Gaming Group | First National vs. Endeavour Silver Corp | First National vs. Nicola Mining | First National vs. Perseus Mining |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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