Correlation Between First National and Everyday People
Can any of the company-specific risk be diversified away by investing in both First National and Everyday People 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 Everyday People 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 Everyday People Financial, you can compare the effects of market volatilities on First National and Everyday People 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 Everyday People. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Everyday People.
Diversification Opportunities for First National and Everyday People
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Everyday is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Everyday People Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everyday People Financial 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 Everyday People. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everyday People Financial has no effect on the direction of First National i.e., First National and Everyday People go up and down completely randomly.
Pair Corralation between First National and Everyday People
Assuming the 90 days trading horizon First National is expected to generate 1.71 times less return on investment than Everyday People. But when comparing it to its historical volatility, First National Financial is 5.44 times less risky than Everyday People. It trades about 0.1 of its potential returns per unit of risk. Everyday People Financial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Everyday People Financial on August 26, 2024 and sell it today you would earn a total of 4.00 from holding Everyday People Financial or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First National Financial vs. Everyday People Financial
Performance |
| Timeline |
| First National Financial |
| Everyday People Financial |
First National and Everyday People Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First National and Everyday People
The main advantage of trading using opposite First National and Everyday People positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National position performs unexpectedly, Everyday People 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 Everyday People will offset losses from the drop in Everyday People's long position.| First National vs. Forstrong Global Income | First National vs. BMO Aggregate Bond | First National vs. Terreno Resources Corp | First National vs. iShares Canadian HYBrid |
| Everyday People vs. NVIDIA CDR | Everyday People vs. Apple Inc CDR | Everyday People vs. Microsoft Corp CDR | Everyday People vs. Amazon CDR |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |