Correlation Between First BanCorp and NTG Nordic

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

By analyzing existing cross correlation between First BanCorp and NTG Nordic Transport, you can compare the effects of market volatilities on First BanCorp and NTG Nordic 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 BanCorp with a short position of NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of First BanCorp and NTG Nordic.

Diversification Opportunities for First BanCorp and NTG Nordic

0.36

Correlation Coefficient

First BanCorp  NTG Nordic

Weak diversification

The 3 months correlation between First and NTG is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding First BanCorp and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport and First BanCorp 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 BanCorp are associated (or correlated) with NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of First BanCorp i.e., First BanCorp and NTG Nordic go up and down completely randomly.

Pair Corralation between First BanCorp and NTG Nordic

Assuming the 90 days trading horizon First BanCorp is expected to generate 0.79 times more return on investment than NTG Nordic. However, First BanCorp is 1.27 times less risky than NTG Nordic. It trades about 0.06 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.01 per unit of risk. If you would invest  1,225  in First BanCorp on October 26, 2024 and sell it today you would earn a total of  725.00  from holding First BanCorp or generate 59.18% return on investment over 90 days.

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

First BanCorp  vs.  NTG Nordic Transport

First BanCorp

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First BanCorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, First BanCorp reported solid returns over the last few months and may actually be approaching a breakup point.

NTG Nordic Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with First BanCorp and NTG Nordic

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

The idea behind First BanCorp and NTG Nordic Transport 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.