Correlation Between Forstrong Global and First National
Can any of the company-specific risk be diversified away by investing in both Forstrong Global 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 Forstrong Global and First National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forstrong Global Income and First National Financial, you can compare the effects of market volatilities on Forstrong Global 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 Forstrong Global with a short position of First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forstrong Global and First National.
Diversification Opportunities for Forstrong Global and First National
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Forstrong and First is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income 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 Forstrong Global 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 Forstrong Global Income 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 Forstrong Global i.e., Forstrong Global and First National go up and down completely randomly.
Pair Corralation between Forstrong Global and First National
Assuming the 90 days trading horizon Forstrong Global is expected to generate 2.34 times less return on investment than First National. But when comparing it to its historical volatility, Forstrong Global Income is 2.86 times less risky than First National. It trades about 0.13 of its potential returns per unit of risk. First National Financial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,168 in First National Financial on August 26, 2024 and sell it today you would earn a total of 292.00 from holding First National Financial or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Forstrong Global Income vs. First National Financial
Performance |
| Timeline |
| Forstrong Global Income |
| First National Financial |
Forstrong Global and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forstrong Global and First National
The main advantage of trading using opposite Forstrong Global and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global 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.| Forstrong Global vs. iShares SPTSX 60 | Forstrong Global vs. iShares Core SP | Forstrong Global vs. iShares Core SPTSX | Forstrong Global vs. BMO Aggregate Bond |
| First National vs. Forstrong Global Income | First National vs. BMO Aggregate Bond | First National vs. Terreno Resources Corp | First National vs. iShares Canadian HYBrid |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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