Correlation Between First National and Financial
Can any of the company-specific risk be diversified away by investing in both First National and Financial 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 Financial 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 Financial 15 Split, you can compare the effects of market volatilities on First National and Financial 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 Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Financial.
Diversification Opportunities for First National and Financial
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Financial is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split 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 Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of First National i.e., First National and Financial go up and down completely randomly.
Pair Corralation between First National and Financial
Assuming the 90 days trading horizon First National is expected to generate 1.22 times less return on investment than Financial. In addition to that, First National is 2.38 times more volatile than Financial 15 Split. It trades about 0.11 of its total potential returns per unit of risk. Financial 15 Split is currently generating about 0.31 per unit of volatility. If you would invest 1,032 in Financial 15 Split on September 1, 2024 and sell it today you would earn a total of 27.00 from holding Financial 15 Split or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First National Financial vs. Financial 15 Split
Performance |
| Timeline |
| First National Financial |
| Financial 15 Split |
First National and Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First National and Financial
The main advantage of trading using opposite First National and Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National position performs unexpectedly, Financial 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 Financial will offset losses from the drop in Financial's long position.| First National vs. Champion Gaming Group | First National vs. Endeavour Silver Corp | First National vs. Nicola Mining | First National vs. Perseus Mining |
| Financial vs. North American Financial | Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. Dividend 15 Split |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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