Correlation Between First National and INTEL CDR

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

Diversification Opportunities for First National and INTEL CDR

-0.39

Correlation Coefficient

First National  INTEL CDR

Very good diversification

The 3 months correlation between First and INTEL is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and INTEL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTEL CDR 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 INTEL CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTEL CDR has no effect on the direction of First National i.e., First National and INTEL CDR go up and down completely randomly.

Pair Corralation between First National and INTEL CDR

Assuming the 90 days trading horizon First National Financial is expected to generate 0.69 times more return on investment than INTEL CDR. However, First National Financial is 1.46 times less risky than INTEL CDR. It trades about 0.18 of its potential returns per unit of risk. INTEL CDR is currently generating about -0.36 per unit of risk. If you would invest  1,460  in First National Financial on September 19, 2024 and sell it today you would earn a total of  95.00  from holding First National Financial or generate 6.51% 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.  INTEL CDR

First National Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, First National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

INTEL CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTEL CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, INTEL CDR is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with First National and INTEL CDR

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

The idea behind First National Financial and INTEL CDR 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.