Correlation Between First National and Mazda
Can any of the company-specific risk be diversified away by investing in both First National and Mazda 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 Mazda 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 Mazda Motor, you can compare the effects of market volatilities on First National and Mazda 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 Mazda. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Mazda.
Diversification Opportunities for First National and Mazda
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Mazda is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding First National of and Mazda Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mazda Motor 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 Mazda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mazda Motor has no effect on the direction of First National i.e., First National and Mazda go up and down completely randomly.
Pair Corralation between First National and Mazda
Given the investment horizon of 90 days First National is expected to generate 24.7 times less return on investment than Mazda. But when comparing it to its historical volatility, First National of is 1.88 times less risky than Mazda. It trades about 0.0 of its potential returns per unit of risk. Mazda Motor is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 681.00 in Mazda Motor on August 27, 2024 and sell it today you would lose (34.00) from holding Mazda Motor or give up 4.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.54% |
| Values | Daily Returns |
First National of vs. Mazda Motor
Performance |
| Timeline |
| First National |
| Mazda Motor |
First National and Mazda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First National and Mazda
The main advantage of trading using opposite First National and Mazda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National position performs unexpectedly, Mazda 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 Mazda will offset losses from the drop in Mazda'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 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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