Correlation Between Applied Digital and First Energy
Can any of the company-specific risk be diversified away by investing in both Applied Digital and First Energy 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 Applied Digital and First Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Digital and First Energy Metals, you can compare the effects of market volatilities on Applied Digital and First Energy 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 Applied Digital with a short position of First Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Digital and First Energy.
Diversification Opportunities for Applied Digital and First Energy
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Applied and First is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Applied Digital and First Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Energy Metals and Applied Digital 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 Applied Digital are associated (or correlated) with First Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Energy Metals has no effect on the direction of Applied Digital i.e., Applied Digital and First Energy go up and down completely randomly.
Pair Corralation between Applied Digital and First Energy
Given the investment horizon of 90 days Applied Digital is expected to generate 0.63 times more return on investment than First Energy. However, Applied Digital is 1.59 times less risky than First Energy. It trades about 0.3 of its potential returns per unit of risk. First Energy Metals is currently generating about -0.05 per unit of risk. If you would invest 648.00 in Applied Digital on November 27, 2024 and sell it today you would earn a total of 253.00 from holding Applied Digital or generate 39.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Digital vs. First Energy Metals
Performance |
| Timeline |
| Applied Digital |
| First Energy Metals |
Applied Digital and First Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Digital and First Energy
The main advantage of trading using opposite Applied Digital and First Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Digital position performs unexpectedly, First Energy 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 Energy will offset losses from the drop in First Energy's long position.| Applied Digital vs. Magic Empire Global | Applied Digital vs. Zhong Yang Financial | Applied Digital vs. Netcapital | Applied Digital vs. Lazard |
| First Energy vs. MCF Energy | First Energy vs. Hypercharge Networks Corp | First Energy vs. Traction Uranium Corp | First Energy vs. F3 Uranium 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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