Correlation Between FirstCash and Bynordic Acquisition

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

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

Diversification Opportunities for FirstCash and Bynordic Acquisition

-0.48

Correlation Coefficient

FirstCash  Bynordic Acquisition

Very good diversification

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

Pair Corralation between FirstCash and Bynordic Acquisition

Given the investment horizon of 90 days FirstCash is expected to generate 4.7 times more return on investment than Bynordic Acquisition. However, FirstCash is 4.7 times more volatile than Bynordic Acquisition Corp. It trades about 0.04 of its potential returns per unit of risk. Bynordic Acquisition Corp is currently generating about 0.06 per unit of risk. If you would invest  8,570  in FirstCash on October 10, 2024 and sell it today you would earn a total of  2,097  from holding FirstCash or generate 24.47% return on investment over 90 days.

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

FirstCash  vs.  Bynordic Acquisition Corp

FirstCash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FirstCash has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, FirstCash is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Bynordic Acquisition Corp

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with FirstCash and Bynordic Acquisition

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

The idea behind FirstCash and Bynordic Acquisition Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.