Correlation Between First National and VersaBank
Can any of the company-specific risk be diversified away by investing in both First National and VersaBank 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 VersaBank 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 VersaBank, you can compare the effects of market volatilities on First National and VersaBank 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 VersaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and VersaBank.
Diversification Opportunities for First National and VersaBank
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and VersaBank is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and VersaBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VersaBank 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 VersaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VersaBank has no effect on the direction of First National i.e., First National and VersaBank go up and down completely randomly.
Pair Corralation between First National and VersaBank
Assuming the 90 days trading horizon First National Financial is expected to under-perform the VersaBank. But the preferred stock apears to be less risky and, when comparing its historical volatility, First National Financial is 2.06 times less risky than VersaBank. The preferred stock trades about 0.0 of its potential returns per unit of risk. The VersaBank is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 2,060 in VersaBank on August 29, 2024 and sell it today you would earn a total of 437.00 from holding VersaBank or generate 21.21% 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. VersaBank
Performance |
| Timeline |
| First National Financial |
| VersaBank |
First National and VersaBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First National and VersaBank
The main advantage of trading using opposite First National and VersaBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National position performs unexpectedly, VersaBank 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 VersaBank will offset losses from the drop in VersaBank's 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 |
| VersaBank vs. Sylogist | VersaBank vs. Sangoma Technologies Corp | VersaBank vs. Firan Technology Group | VersaBank vs. Hammond Power Solutions |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |