Correlation Between First State and Nintendo
Can any of the company-specific risk be diversified away by investing in both First State and Nintendo 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 Nintendo 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 Nintendo Co, you can compare the effects of market volatilities on First State and Nintendo 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 Nintendo. Check out your portfolio center. Please also check ongoing floating volatility patterns of First State and Nintendo.
Diversification Opportunities for First State and Nintendo
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Nintendo is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding First State Financial and Nintendo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo 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 Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo has no effect on the direction of First State i.e., First State and Nintendo go up and down completely randomly.
Pair Corralation between First State and Nintendo
Given the investment horizon of 90 days First State Financial is expected to generate 10.14 times more return on investment than Nintendo. However, First State is 10.14 times more volatile than Nintendo Co. It trades about 0.17 of its potential returns per unit of risk. Nintendo Co is currently generating about 0.04 per unit of risk. If you would invest 2.11 in First State Financial on September 1, 2024 and sell it today you would earn a total of 2.36 from holding First State Financial or generate 111.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.06% |
| Values | Daily Returns |
First State Financial vs. Nintendo Co
Performance |
| Timeline |
| First State Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nintendo |
First State and Nintendo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First State and Nintendo
The main advantage of trading using opposite First State and Nintendo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First State position performs unexpectedly, Nintendo 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 Nintendo will offset losses from the drop in Nintendo's 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 |
| Nintendo vs. CD Projekt SA | Nintendo vs. Sega Sammy Holdings | Nintendo vs. Playtika Holding Corp | Nintendo vs. Square Enix Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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