Correlation Between First National and Equity Metals
Can any of the company-specific risk be diversified away by investing in both First National and Equity Metals 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 Equity Metals 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 Equity Metals Corp, you can compare the effects of market volatilities on First National and Equity Metals 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 Equity Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Equity Metals.
Diversification Opportunities for First National and Equity Metals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Equity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Equity Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Metals Corp 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 Equity Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Metals Corp has no effect on the direction of First National i.e., First National and Equity Metals go up and down completely randomly.
Pair Corralation between First National and Equity Metals
Assuming the 90 days trading horizon First National is expected to generate 3.8 times less return on investment than Equity Metals. But when comparing it to its historical volatility, First National Financial is 7.61 times less risky than Equity Metals. It trades about 0.07 of its potential returns per unit of risk. Equity Metals Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Equity Metals Corp on August 29, 2024 and sell it today you would earn a total of 1.00 from holding Equity Metals Corp or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First National Financial vs. Equity Metals Corp
Performance |
| Timeline |
| First National Financial |
| Equity Metals Corp |
First National and Equity Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First National and Equity Metals
The main advantage of trading using opposite First National and Equity Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National position performs unexpectedly, Equity Metals 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 Equity Metals will offset losses from the drop in Equity Metals' long position.| First National vs. Walmart Inc CDR | First National vs. Amazon CDR | First National vs. Berkshire Hathaway CDR | First National vs. UnitedHealth Group CDR |
| Equity Metals vs. Arbor Metals Corp | Equity Metals vs. Intact Financial Corp | Equity Metals vs. First National Financial | Equity Metals vs. Olympia Financial Group |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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