Correlation Between Bank Rakyat and First Northern
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and First Northern 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 Bank Rakyat and First Northern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and First Northern Community, you can compare the effects of market volatilities on Bank Rakyat and First Northern 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 Bank Rakyat with a short position of First Northern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and First Northern.
Diversification Opportunities for Bank Rakyat and First Northern
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and First is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and First Northern Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northern Community and Bank Rakyat 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 Bank Rakyat are associated (or correlated) with First Northern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northern Community has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and First Northern go up and down completely randomly.
Pair Corralation between Bank Rakyat and First Northern
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the First Northern. In addition to that, Bank Rakyat is 14.07 times more volatile than First Northern Community. It trades about -0.22 of its total potential returns per unit of risk. First Northern Community is currently generating about 0.14 per unit of volatility. If you would invest 991.00 in First Northern Community on November 27, 2024 and sell it today you would earn a total of 4.00 from holding First Northern Community or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. First Northern Community
Performance |
| Timeline |
| Bank Rakyat |
| First Northern Community |
Bank Rakyat and First Northern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and First Northern
The main advantage of trading using opposite Bank Rakyat and First Northern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, First Northern 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 Northern will offset losses from the drop in First Northern's long position.| Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Eurobank Ergasias Services | Bank Rakyat vs. Nedbank Group | Bank Rakyat vs. Standard Bank Group |
| First Northern vs. Community West Bancshares | First Northern vs. Home Bancorp | First Northern vs. CB Financial Services | First Northern vs. Civista Bancshares |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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