Correlation Between First National and Baselode Energy

Can any of the company-specific risk be diversified away by investing in both First National and Baselode Energy 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 Baselode Energy 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 Baselode Energy Corp, you can compare the effects of market volatilities on First National and Baselode Energy 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 Baselode Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Baselode Energy.

Diversification Opportunities for First National and Baselode Energy

-0.2

Correlation Coefficient

First National  Baselode Energy

Good diversification

The 3 months correlation between First and Baselode is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Baselode Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baselode Energy Corp 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 Baselode Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baselode Energy Corp has no effect on the direction of First National i.e., First National and Baselode Energy go up and down completely randomly.

Pair Corralation between First National and Baselode Energy

Assuming the 90 days trading horizon First National is expected to generate 67.8 times less return on investment than Baselode Energy. But when comparing it to its historical volatility, First National Financial is 5.93 times less risky than Baselode Energy. It trades about 0.01 of its potential returns per unit of risk. Baselode Energy Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Baselode Energy Corp on December 28, 2024 and sell it today you would earn a total of  3.00  from holding Baselode Energy Corp or generate 37.5% return on investment over 90 days.

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

First National Financial  vs.  Baselode Energy Corp

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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Baselode Energy Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baselode Energy Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Baselode Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First National and Baselode Energy

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

The idea behind First National Financial and Baselode Energy 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.