Correlation Between Hyundai and First National
Can any of the company-specific risk be diversified away by investing in both Hyundai and First National 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 Hyundai and First National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor Co and First National of, you can compare the effects of market volatilities on Hyundai and First National 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 Hyundai with a short position of First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and First National.
Diversification Opportunities for Hyundai and First National
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and First is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and First National of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National and Hyundai 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 Hyundai Motor Co are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National has no effect on the direction of Hyundai i.e., Hyundai and First National go up and down completely randomly.
Pair Corralation between Hyundai and First National
Assuming the 90 days horizon Hyundai Motor Co is expected to under-perform the First National. In addition to that, Hyundai is 1.58 times more volatile than First National of. It trades about -0.24 of its total potential returns per unit of risk. First National of is currently generating about 0.19 per unit of volatility. If you would invest 1,161,698 in First National of on August 24, 2024 and sell it today you would earn a total of 58,302 from holding First National of or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. First National of
Performance |
| Timeline |
| Hyundai Motor |
| First National |
Hyundai and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and First National
The main advantage of trading using opposite Hyundai and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, First National 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 First National will offset losses from the drop in First National's long position.The idea behind Hyundai Motor Co and First National of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| First National vs. Pioneer Floating Rate | First National vs. The Gabelli Equity | First National vs. Pioneer Municipal High | First National vs. Nuveen Global High |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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