Correlation Between First National and Madison Pacific
Can any of the company-specific risk be diversified away by investing in both First National and Madison Pacific 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 Madison Pacific 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 Madison Pacific Properties, you can compare the effects of market volatilities on First National and Madison Pacific 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 Madison Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Madison Pacific.
Diversification Opportunities for First National and Madison Pacific
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Madison is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Madison Pacific Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Pacific Prop 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 Madison Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Pacific Prop has no effect on the direction of First National i.e., First National and Madison Pacific go up and down completely randomly.
Pair Corralation between First National and Madison Pacific
Assuming the 90 days trading horizon First National Financial is expected to generate 0.4 times more return on investment than Madison Pacific. However, First National Financial is 2.48 times less risky than Madison Pacific. It trades about 0.02 of its potential returns per unit of risk. Madison Pacific Properties is currently generating about -0.03 per unit of risk. If you would invest 1,438 in First National Financial on August 30, 2024 and sell it today you would earn a total of 30.00 from holding First National Financial or generate 2.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First National Financial vs. Madison Pacific Properties
Performance |
| Timeline |
| First National Financial |
| Madison Pacific Prop |
First National and Madison Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First National and Madison Pacific
The main advantage of trading using opposite First National and Madison Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National position performs unexpectedly, Madison Pacific 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 Madison Pacific will offset losses from the drop in Madison Pacific's long position.| First National vs. Osisko Metals | First National vs. Canaf Investments | First National vs. Precision Drilling | First National vs. Ramp Metals |
| Madison Pacific vs. First National Financial | Madison Pacific vs. Canso Credit Trust | Madison Pacific vs. East Side Games | Madison Pacific vs. Income Financial Trust |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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