Correlation Between First National and Bridgemarq Real

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

Diversification Opportunities for First National and Bridgemarq Real

0.86

Correlation Coefficient

First National  Bridgemarq Real

Very poor diversification

The 3 months correlation between First and Bridgemarq is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Bridgemarq Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgemarq Real Estate 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 Bridgemarq Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgemarq Real Estate has no effect on the direction of First National i.e., First National and Bridgemarq Real go up and down completely randomly.

Pair Corralation between First National and Bridgemarq Real

Assuming the 90 days horizon First National Financial is expected to generate 0.78 times more return on investment than Bridgemarq Real. However, First National Financial is 1.28 times less risky than Bridgemarq Real. It trades about 0.22 of its potential returns per unit of risk. Bridgemarq Real Estate is currently generating about 0.13 per unit of risk. If you would invest  3,657  in First National Financial on September 12, 2024 and sell it today you would earn a total of  515.00  from holding First National Financial or generate 14.08% return on investment over 90 days.

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

First National Financial  vs.  Bridgemarq Real Estate

First National Financial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, First National displayed solid returns over the last few months and may actually be approaching a breakup point.

Bridgemarq Real Estate

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgemarq Real Estate are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Bridgemarq Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First National and Bridgemarq Real

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

The idea behind First National Financial and Bridgemarq Real Estate 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.