Correlation Between OPERA SOFTWARE and FIRST NATIONAL

Can any of the company-specific risk be diversified away by investing in both OPERA SOFTWARE and FIRST NATIONAL 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 OPERA SOFTWARE and FIRST NATIONAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between OPERA SOFTWARE and FIRST NATIONAL FIN, you can compare the effects of market volatilities on OPERA SOFTWARE and FIRST NATIONAL 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 OPERA SOFTWARE with a short position of FIRST NATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of OPERA SOFTWARE and FIRST NATIONAL.

Diversification Opportunities for OPERA SOFTWARE and FIRST NATIONAL

0.25

Correlation Coefficient

OPERA SOFTWARE  FIRST NATIONAL

Modest diversification

The 3 months correlation between OPERA and FIRST is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding OPERA SOFTWARE and FIRST NATIONAL FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST NATIONAL FIN and OPERA SOFTWARE 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 OPERA SOFTWARE are associated (or correlated) with FIRST NATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST NATIONAL FIN has no effect on the direction of OPERA SOFTWARE i.e., OPERA SOFTWARE and FIRST NATIONAL go up and down completely randomly.

Pair Corralation between OPERA SOFTWARE and FIRST NATIONAL

Assuming the 90 days trading horizon OPERA SOFTWARE is expected to under-perform the FIRST NATIONAL. But the stock apears to be less risky and, when comparing its historical volatility, OPERA SOFTWARE is 1.08 times less risky than FIRST NATIONAL. The stock trades about -0.03 of its potential returns per unit of risk. The FIRST NATIONAL FIN is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,555  in FIRST NATIONAL FIN on October 23, 2024 and sell it today you would earn a total of  85.00  from holding FIRST NATIONAL FIN or generate 3.33% return on investment over 90 days.

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

OPERA SOFTWARE  vs.  FIRST NATIONAL FIN

OPERA SOFTWARE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OPERA SOFTWARE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, OPERA SOFTWARE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

FIRST NATIONAL FIN

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST NATIONAL FIN are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FIRST NATIONAL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with OPERA SOFTWARE and FIRST NATIONAL

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

The idea behind OPERA SOFTWARE and FIRST NATIONAL FIN 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.

Check out your portfolio center.

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.