Correlation Between Apple and First National

Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and First National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc CDR and First National Financial, you can compare the effects of market volatilities on Apple 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 Apple with a short position of First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and First National.

Diversification Opportunities for Apple and First National

0.24

Correlation Coefficient

Apple  First National

Modest diversification

The 3 months correlation between Apple and First is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Financial and Apple 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 Apple Inc CDR 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 Financial has no effect on the direction of Apple i.e., Apple and First National go up and down completely randomly.

Pair Corralation between Apple and First National

Assuming the 90 days trading horizon Apple Inc CDR is expected to under-perform the First National. In addition to that, Apple is 1.53 times more volatile than First National Financial. It trades about -0.13 of its total potential returns per unit of risk. First National Financial is currently generating about 0.03 per unit of volatility. If you would invest  1,536  in First National Financial on December 30, 2024 and sell it today you would earn a total of  24.00  from holding First National Financial or generate 1.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Apple Inc CDR  vs.  First National Financial

Apple Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

First National Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, First National is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apple and First National

The main advantage of trading using opposite Apple and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc CDR and First National Financial 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.