Correlation Between First National and Ascot Resources

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

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

Diversification Opportunities for First National and Ascot Resources

-0.15

Correlation Coefficient

First National  Ascot Resources

Good diversification

The 3 months correlation between First and Ascot is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Ascot Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascot Resources and First National 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 National Financial are associated (or correlated) with Ascot Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascot Resources has no effect on the direction of First National i.e., First National and Ascot Resources go up and down completely randomly.

Pair Corralation between First National and Ascot Resources

Assuming the 90 days trading horizon First National Financial is expected to generate 0.17 times more return on investment than Ascot Resources. However, First National Financial is 5.96 times less risky than Ascot Resources. It trades about -0.04 of its potential returns per unit of risk. Ascot Resources is currently generating about -0.04 per unit of risk. If you would invest  1,575  in First National Financial on December 22, 2024 and sell it today you would lose (55.00) from holding First National Financial or give up 3.49% of portfolio value over 90 days.

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

First National Financial  vs.  Ascot Resources

First National Financial

Risk-Adjusted Performance

Very Weak

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

Ascot Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ascot Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with First National and Ascot Resources

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

The idea behind First National Financial and Ascot 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.