Correlation Between TRON and First Capital
Can any of the company-specific risk be diversified away by investing in both TRON and First 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 TRON and First Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRON and First Capital, you can compare the effects of market volatilities on TRON and First 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 TRON with a short position of First Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and First Capital.
Diversification Opportunities for TRON and First Capital
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TRON and First is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding TRON and First Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital and TRON 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 TRON are associated (or correlated) with First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital has no effect on the direction of TRON i.e., TRON and First Capital go up and down completely randomly.
Pair Corralation between TRON and First Capital
Assuming the 90 days trading horizon TRON is expected to generate 4.71 times more return on investment than First Capital. However, TRON is 4.71 times more volatile than First Capital. It trades about 0.08 of its potential returns per unit of risk. First Capital is currently generating about 0.03 per unit of risk. If you would invest 15.00 in TRON on November 2, 2024 and sell it today you would earn a total of 10.00 from holding TRON or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.26% |
| Values | Daily Returns |
TRON vs. First Capital
Performance |
| Timeline |
| TRON |
| First Capital |
TRON and First Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRON and First Capital
The main advantage of trading using opposite TRON and First Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON position performs unexpectedly, First 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 First Capital will offset losses from the drop in First Capital's long position.The idea behind TRON and First Capital 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 Capital vs. Home Federal Bancorp | First Capital vs. First Financial Northwest | First Capital vs. First Northwest Bancorp | First Capital vs. Community West Bancshares |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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