Correlation Between First National and Falcon Energy
Can any of the company-specific risk be diversified away by investing in both First National and Falcon 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 Falcon 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 Falcon Energy Materials, you can compare the effects of market volatilities on First National and Falcon 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 Falcon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Falcon Energy.
Diversification Opportunities for First National and Falcon Energy
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Falcon is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Falcon Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Energy Materials 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 Falcon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Energy Materials has no effect on the direction of First National i.e., First National and Falcon Energy go up and down completely randomly.
Pair Corralation between First National and Falcon Energy
Assuming the 90 days trading horizon First National Financial is expected to generate 0.23 times more return on investment than Falcon Energy. However, First National Financial is 4.26 times less risky than Falcon Energy. It trades about 0.03 of its potential returns per unit of risk. Falcon Energy Materials is currently generating about -0.05 per unit of risk. 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 |
First National Financial vs. Falcon Energy Materials
Performance |
Timeline |
First National Financial |
Falcon Energy Materials |
First National and Falcon Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First National and Falcon Energy
The main advantage of trading using opposite First National and Falcon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National position performs unexpectedly, Falcon 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 Falcon Energy will offset losses from the drop in Falcon Energy's long position.First National vs. Nicola Mining | First National vs. Diamond Estates Wines | First National vs. Hemisphere Energy | First National vs. Data Communications Management |
Falcon Energy vs. TGS Esports | Falcon Energy vs. Diversified Royalty Corp | Falcon Energy vs. Maple Peak Investments | Falcon Energy vs. Partners Value Investments |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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