Correlation Between First American and First Investors
Can any of the company-specific risk be diversified away by investing in both First American and First Investors 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 American and First Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First American Funds and First Investors Hedged, you can compare the effects of market volatilities on First American and First Investors 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 American with a short position of First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of First American and First Investors.
Diversification Opportunities for First American and First Investors
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First American Funds and First Investors Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Hedged and First American 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 American Funds are associated (or correlated) with First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Hedged has no effect on the direction of First American i.e., First American and First Investors go up and down completely randomly.
Pair Corralation between First American and First Investors
If you would invest (100.00) in First Investors Hedged on August 28, 2024 and sell it today you would earn a total of 100.00 from holding First Investors Hedged or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First American Funds vs. First Investors Hedged
Performance |
| Timeline |
| First American Funds |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| First Investors Hedged |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First American and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First American and First Investors
The main advantage of trading using opposite First American and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First American position performs unexpectedly, First Investors 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 Investors will offset losses from the drop in First Investors' long position.| First American vs. Prudential Core Conservative | First American vs. Fidelity Advisor Diversified | First American vs. Pimco Diversified Income | First American vs. Tiaa Cref Lifestyle Conservative |
| First Investors vs. First American Funds | First Investors vs. First American Funds | First Investors vs. First American Funds | First Investors vs. First American Funds |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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