Correlation Between First National and Apple
Can any of the company-specific risk be diversified away by investing in both First National and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First National Financial and Apple Inc CDR, you can compare the effects of market volatilities on First National and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Apple.
Diversification Opportunities for First National and Apple
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and Apple is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR 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 Financial are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of First National i.e., First National and Apple go up and down completely randomly.
Pair Corralation between First National and Apple
Assuming the 90 days trading horizon First National is expected to generate 3.4 times less return on investment than Apple. In addition to that, First National is 1.09 times more volatile than Apple Inc CDR. It trades about 0.11 of its total potential returns per unit of risk. Apple Inc CDR is currently generating about 0.41 per unit of volatility. If you would invest 3,256 in Apple Inc CDR on September 4, 2024 and sell it today you would earn a total of 254.00 from holding Apple Inc CDR or generate 7.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
First National Financial vs. Apple Inc CDR
Performance |
| Timeline |
| First National Financial |
| Apple Inc CDR |
First National and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First National and Apple
The main advantage of trading using opposite First National and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| First National vs. Income Financial Trust | First National vs. Quipt Home Medical | First National vs. Royal Bank of | First National vs. Stampede Drilling |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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