Correlation Between First National and Keyence
Can any of the company-specific risk be diversified away by investing in both First National and Keyence 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 National and Keyence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First National of and Keyence, you can compare the effects of market volatilities on First National and Keyence 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 National with a short position of Keyence. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Keyence.
Diversification Opportunities for First National and Keyence
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Keyence is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding First National of and Keyence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyence and First National 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 National of are associated (or correlated) with Keyence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyence has no effect on the direction of First National i.e., First National and Keyence go up and down completely randomly.
Pair Corralation between First National and Keyence
Given the investment horizon of 90 days First National of is expected to generate 0.55 times more return on investment than Keyence. However, First National of is 1.83 times less risky than Keyence. It trades about 0.07 of its potential returns per unit of risk. Keyence is currently generating about -0.05 per unit of risk. If you would invest 1,200,000 in First National of on August 29, 2024 and sell it today you would earn a total of 20,000 from holding First National of or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First National of vs. Keyence
Performance |
| Timeline |
| First National |
| Keyence |
First National and Keyence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First National and Keyence
The main advantage of trading using opposite First National and Keyence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National position performs unexpectedly, Keyence 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 Keyence will offset losses from the drop in Keyence's long position.| First National vs. Washington Business Bank | First National vs. National Capital Bank | First National vs. Community Heritage Financial | First National vs. Citizens Financial Corp |
| Keyence vs. Garmin | Keyence vs. Keysight Technologies | Keyence vs. Fortive Corp | Keyence vs. Teledyne Technologies Incorporated |
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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