Correlation Between First National and Firm Capital
Can any of the company-specific risk be diversified away by investing in both First National and Firm Capital 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 Firm Capital 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 Firm Capital Mortgage, you can compare the effects of market volatilities on First National and Firm Capital 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 Firm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Firm Capital.
Diversification Opportunities for First National and Firm Capital
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Firm is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Firm Capital Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firm Capital Mortgage 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 Firm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firm Capital Mortgage has no effect on the direction of First National i.e., First National and Firm Capital go up and down completely randomly.
Pair Corralation between First National and Firm Capital
Assuming the 90 days horizon First National Financial is expected to generate 1.29 times more return on investment than Firm Capital. However, First National is 1.29 times more volatile than Firm Capital Mortgage. It trades about 0.43 of its potential returns per unit of risk. Firm Capital Mortgage is currently generating about 0.13 per unit of risk. If you would invest 4,045 in First National Financial on August 28, 2024 and sell it today you would earn a total of 399.00 from holding First National Financial or generate 9.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First National Financial vs. Firm Capital Mortgage
Performance |
| Timeline |
| First National Financial |
| Firm Capital Mortgage |
First National and Firm Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First National and Firm Capital
The main advantage of trading using opposite First National and Firm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National position performs unexpectedly, Firm Capital 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 Firm Capital will offset losses from the drop in Firm Capital's long position.| First National vs. Exchange Income | First National vs. Atrium Mortgage Investment | First National vs. Equitable Group | First National vs. Timbercreek Financial Corp |
| Firm Capital vs. Senvest Capital | Firm Capital vs. Fairfax Financial Holdings | Firm Capital vs. Bank of Montreal | Firm Capital vs. Bank of Montreal |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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