Correlation Between First State and Global Acquisitions
Can any of the company-specific risk be diversified away by investing in both First State and Global Acquisitions 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 State and Global Acquisitions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First State Financial and Global Acquisitions, you can compare the effects of market volatilities on First State and Global Acquisitions 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 State with a short position of Global Acquisitions. Check out your portfolio center. Please also check ongoing floating volatility patterns of First State and Global Acquisitions.
Diversification Opportunities for First State and Global Acquisitions
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Global is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First State Financial and Global Acquisitions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Acquisitions and First State 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 State Financial are associated (or correlated) with Global Acquisitions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Acquisitions has no effect on the direction of First State i.e., First State and Global Acquisitions go up and down completely randomly.
Pair Corralation between First State and Global Acquisitions
Given the investment horizon of 90 days First State Financial is expected to generate 1.37 times more return on investment than Global Acquisitions. However, First State is 1.37 times more volatile than Global Acquisitions. It trades about 0.1 of its potential returns per unit of risk. Global Acquisitions is currently generating about 0.11 per unit of risk. If you would invest 4.80 in First State Financial on September 3, 2024 and sell it today you would lose (0.33) from holding First State Financial or give up 6.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 30.71% |
| Values | Daily Returns |
First State Financial vs. Global Acquisitions
Performance |
| Timeline |
| First State Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Global Acquisitions |
First State and Global Acquisitions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First State and Global Acquisitions
The main advantage of trading using opposite First State and Global Acquisitions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First State position performs unexpectedly, Global Acquisitions 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 Global Acquisitions will offset losses from the drop in Global Acquisitions' long position.| First State vs. First Interstate BancSystem | First State vs. First Financial Bankshares | First State vs. Independent Bank Group | First State vs. CVB Financial |
| Global Acquisitions vs. Ambase Corp | Global Acquisitions vs. American Commerce Solutions | Global Acquisitions vs. Altex Industries | Global Acquisitions vs. Advanced Oxygen Technologies |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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