Correlation Between First National and BlackRock MIT

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

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

Diversification Opportunities for First National and BlackRock MIT

-0.25

Correlation Coefficient

First National  BlackRock MIT

Very good diversification

The 3 months correlation between First and BlackRock is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding First National Bank and BlackRock MIT II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock MIT II and First National 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 First National Bank are associated (or correlated) with BlackRock MIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock MIT II has no effect on the direction of First National i.e., First National and BlackRock MIT go up and down completely randomly.

Pair Corralation between First National and BlackRock MIT

Given the investment horizon of 90 days First National Bank is expected to under-perform the BlackRock MIT. In addition to that, First National is 2.24 times more volatile than BlackRock MIT II. It trades about -0.07 of its total potential returns per unit of risk. BlackRock MIT II is currently generating about 0.19 per unit of volatility. If you would invest  1,039  in BlackRock MIT II on October 25, 2024 and sell it today you would earn a total of  21.00  from holding BlackRock MIT II or generate 2.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

First National Bank  vs.  BlackRock MIT II

First National Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First National Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, First National disclosed solid returns over the last few months and may actually be approaching a breakup point.

BlackRock MIT II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock MIT II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, BlackRock MIT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with First National and BlackRock MIT

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

The idea behind First National Bank and BlackRock MIT II 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.