Correlation Between First National and Yerbae Brands

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

Diversification Opportunities for First National and Yerbae Brands

-0.54

Correlation Coefficient

First National  Yerbae Brands

Excellent diversification

The 3 months correlation between First and Yerbae is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Yerbae Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yerbae Brands 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 Yerbae Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yerbae Brands Corp has no effect on the direction of First National i.e., First National and Yerbae Brands go up and down completely randomly.

Pair Corralation between First National and Yerbae Brands

Assuming the 90 days trading horizon First National Financial is expected to generate 0.13 times more return on investment than Yerbae Brands. However, First National Financial is 7.96 times less risky than Yerbae Brands. It trades about 0.13 of its potential returns per unit of risk. Yerbae Brands Corp is currently generating about -0.01 per unit of risk. If you would invest  1,423  in First National Financial on October 1, 2024 and sell it today you would earn a total of  152.00  from holding First National Financial or generate 10.68% return on investment over 90 days.

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

First National Financial  vs.  Yerbae Brands Corp

First National Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 10 (%) 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.

Yerbae Brands Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yerbae Brands Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Yerbae Brands is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First National and Yerbae Brands

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

The idea behind First National Financial and Yerbae Brands 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.