Correlation Between Falcon Energy and First National

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

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

Diversification Opportunities for Falcon Energy and First National

-0.16

Correlation Coefficient

Falcon Energy  First National

Good diversification

The 3 months correlation between Falcon and First is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Financial and Falcon Energy 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 Falcon Energy Materials are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Financial has no effect on the direction of Falcon Energy i.e., Falcon Energy and First National go up and down completely randomly.

Pair Corralation between Falcon Energy and First National

Assuming the 90 days trading horizon Falcon Energy Materials is expected to under-perform the First National. In addition to that, Falcon Energy is 4.26 times more volatile than First National Financial. It trades about -0.05 of its total potential returns per unit of risk. First National Financial is currently generating about 0.03 per unit of volatility. If you would invest  1,536  in First National Financial on December 30, 2024 and sell it today you would earn a total of  24.00  from holding First National Financial or generate 1.56% return on investment over 90 days.

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

Falcon Energy Materials  vs.  First National Financial

Falcon Energy Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Falcon Energy Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

First National Financial

Risk-Adjusted Performance

Weak

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

Pair Trading with Falcon Energy and First National

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

The idea behind Falcon Energy Materials and First National Financial 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.