Correlation Between Dividend and First National

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

By analyzing existing cross correlation between Dividend 15 Split and First National Financial, you can compare the effects of market volatilities on Dividend 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 Dividend with a short position of First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dividend and First National.

Diversification Opportunities for Dividend and First National

0.68

Correlation Coefficient

Dividend  First National

Poor diversification

The 3 months correlation between Dividend and First is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dividend 15 Split 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 Dividend 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 Dividend 15 Split 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 Dividend i.e., Dividend and First National go up and down completely randomly.

Pair Corralation between Dividend and First National

Assuming the 90 days trading horizon Dividend is expected to generate 1.16 times less return on investment than First National. But when comparing it to its historical volatility, Dividend 15 Split is 3.74 times less risky than First National. It trades about 0.18 of its potential returns per unit of risk. First National Financial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,146  in First National Financial on October 9, 2024 and sell it today you would earn a total of  354.00  from holding First National Financial or generate 30.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Dividend 15 Split  vs.  First National Financial

Dividend 15 Split

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dividend 15 Split are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Dividend is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

First National Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 3 (%) 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 Dividend and First National

The main advantage of trading using opposite Dividend and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dividend 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 Dividend 15 Split 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.