Correlation Between First Bancshares, and Aritzia

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

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

Diversification Opportunities for First Bancshares, and Aritzia

-0.18

Correlation Coefficient

First Bancshares,  Aritzia

Good diversification

The 3 months correlation between First and Aritzia is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding The First Bancshares, and Aritzia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aritzia and First Bancshares, 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 The First Bancshares, are associated (or correlated) with Aritzia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aritzia has no effect on the direction of First Bancshares, i.e., First Bancshares, and Aritzia go up and down completely randomly.

Pair Corralation between First Bancshares, and Aritzia

Given the investment horizon of 90 days First Bancshares, is expected to generate 4.26 times less return on investment than Aritzia. But when comparing it to its historical volatility, The First Bancshares, is 1.95 times less risky than Aritzia. It trades about 0.03 of its potential returns per unit of risk. Aritzia is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,627  in Aritzia on October 12, 2024 and sell it today you would earn a total of  366.00  from holding Aritzia or generate 10.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The First Bancshares,  vs.  Aritzia

First Bancshares,

Risk-Adjusted Performance

2 of 100

Insignificant

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

Aritzia

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aritzia are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aritzia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Bancshares, and Aritzia

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

The idea behind The First Bancshares, and Aritzia 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.