Correlation Between First Asset and Guardian Directed

Can any of the company-specific risk be diversified away by investing in both First Asset and Guardian Directed 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 Asset and Guardian Directed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Asset Energy and Guardian Directed Premium, you can compare the effects of market volatilities on First Asset and Guardian Directed 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 Asset with a short position of Guardian Directed. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and Guardian Directed.

Diversification Opportunities for First Asset and Guardian Directed

-0.2

Correlation Coefficient

First Asset  Guardian Directed

Good diversification

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

Pair Corralation between First Asset and Guardian Directed

Assuming the 90 days trading horizon First Asset Energy is expected to generate 1.61 times more return on investment than Guardian Directed. However, First Asset is 1.61 times more volatile than Guardian Directed Premium. It trades about 0.16 of its potential returns per unit of risk. Guardian Directed Premium is currently generating about -0.04 per unit of risk. If you would invest  516.00  in First Asset Energy on December 29, 2024 and sell it today you would earn a total of  56.00  from holding First Asset Energy or generate 10.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

First Asset Energy  vs.  Guardian Directed Premium

First Asset Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Asset Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, First Asset may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Guardian Directed Premium

Risk-Adjusted Performance

Very Weak

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

Pair Trading with First Asset and Guardian Directed

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

The idea behind First Asset Energy and Guardian Directed Premium 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.