Correlation Between First National and Plaza Retail
Can any of the company-specific risk be diversified away by investing in both First National and Plaza Retail 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 Plaza Retail 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 Plaza Retail REIT, you can compare the effects of market volatilities on First National and Plaza Retail 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 Plaza Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Plaza Retail.
Diversification Opportunities for First National and Plaza Retail
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Plaza is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Plaza Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Retail REIT 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 Plaza Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Retail REIT has no effect on the direction of First National i.e., First National and Plaza Retail go up and down completely randomly.
Pair Corralation between First National and Plaza Retail
Assuming the 90 days trading horizon First National is expected to generate 1.97 times less return on investment than Plaza Retail. In addition to that, First National is 1.15 times more volatile than Plaza Retail REIT. It trades about 0.03 of its total potential returns per unit of risk. Plaza Retail REIT is currently generating about 0.07 per unit of volatility. If you would invest 351.00 in Plaza Retail REIT on September 1, 2024 and sell it today you would earn a total of 23.00 from holding Plaza Retail REIT or generate 6.55% 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. Plaza Retail REIT
Performance |
| Timeline |
| First National Financial |
| Plaza Retail REIT |
First National and Plaza Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First National and Plaza Retail
The main advantage of trading using opposite First National and Plaza Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National position performs unexpectedly, Plaza Retail 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 Plaza Retail will offset losses from the drop in Plaza Retail'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 |
| Plaza Retail vs. Slate Office REIT | Plaza Retail vs. Automotive Properties Real | Plaza Retail vs. BTB Real Estate | Plaza Retail vs. CT Real Estate |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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