Correlation Between Firm Capital and Greenfire Resources

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

By analyzing existing cross correlation between Firm Capital Mortgage and Greenfire Resources, you can compare the effects of market volatilities on Firm Capital and Greenfire Resources 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 Firm Capital with a short position of Greenfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firm Capital and Greenfire Resources.

Diversification Opportunities for Firm Capital and Greenfire Resources

-0.48

Correlation Coefficient

Firm Capital  Greenfire Resources

Very good diversification

The 3 months correlation between Firm and Greenfire is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Firm Capital Mortgage and Greenfire Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenfire Resources and Firm Capital 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 Firm Capital Mortgage are associated (or correlated) with Greenfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenfire Resources has no effect on the direction of Firm Capital i.e., Firm Capital and Greenfire Resources go up and down completely randomly.

Pair Corralation between Firm Capital and Greenfire Resources

Assuming the 90 days horizon Firm Capital is expected to generate 2.31 times less return on investment than Greenfire Resources. But when comparing it to its historical volatility, Firm Capital Mortgage is 3.47 times less risky than Greenfire Resources. It trades about 0.09 of its potential returns per unit of risk. Greenfire Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  734.00  in Greenfire Resources on October 3, 2024 and sell it today you would earn a total of  280.00  from holding Greenfire Resources or generate 38.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	83.83%
Values	Daily Returns

Firm Capital Mortgage  vs.  Greenfire Resources

Firm Capital Mortgage

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Firm Capital Mortgage are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Firm Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Greenfire Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenfire Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Greenfire Resources is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Firm Capital and Greenfire Resources

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

The idea behind Firm Capital Mortgage and Greenfire Resources 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.