Correlation Between Aquagold International and First Financial

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

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

Diversification Opportunities for Aquagold International and First Financial

-0.14

Correlation Coefficient

Aquagold International  First Financial

Good diversification

The 3 months correlation between Aquagold and First is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and First Financial Northwest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Financial Northwest and Aquagold International 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 Aquagold International are associated (or correlated) with First Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Financial Northwest has no effect on the direction of Aquagold International i.e., Aquagold International and First Financial go up and down completely randomly.

Pair Corralation between Aquagold International and First Financial

Given the investment horizon of 90 days Aquagold International is expected to under-perform the First Financial. In addition to that, Aquagold International is 2.83 times more volatile than First Financial Northwest. It trades about -0.12 of its total potential returns per unit of risk. First Financial Northwest is currently generating about 0.05 per unit of volatility. If you would invest  2,155  in First Financial Northwest on December 29, 2024 and sell it today you would earn a total of  110.00  from holding First Financial Northwest or generate 5.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Aquagold International  vs.  First Financial Northwest

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

First Financial Northwest

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Financial Northwest are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, First Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Aquagold International and First Financial

The main advantage of trading using opposite Aquagold International and First Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International position performs unexpectedly, First Financial 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 Financial will offset losses from the drop in First Financial's long position.

The idea behind Aquagold International and First Financial Northwest 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.