Correlation Between First CommunityPFD and Mind Medicine

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

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

Diversification Opportunities for First CommunityPFD and Mind Medicine

-0.04

Correlation Coefficient

First CommunityPFD  Mind Medicine

Good diversification

The 3 months correlation between First and Mind is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Community and Mind Medicine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mind Medicine and First CommunityPFD 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 Community are associated (or correlated) with Mind Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mind Medicine has no effect on the direction of First CommunityPFD i.e., First CommunityPFD and Mind Medicine go up and down completely randomly.

Pair Corralation between First CommunityPFD and Mind Medicine

Assuming the 90 days horizon First Community is expected to under-perform the Mind Medicine. But the pink sheet apears to be less risky and, when comparing its historical volatility, First Community is 27.6 times less risky than Mind Medicine. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Mind Medicine is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  684.00  in Mind Medicine on December 27, 2024 and sell it today you would lose (6.00) from holding Mind Medicine or give up 0.88% of portfolio value over 90 days.

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

First Community  vs.  Mind Medicine

First CommunityPFD

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Community has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, First CommunityPFD is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Mind Medicine

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mind Medicine are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, Mind Medicine may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with First CommunityPFD and Mind Medicine

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

The idea behind First Community and Mind Medicine 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.