Correlation Between TRADEDOUBLER and FIRST NATIONAL
Can any of the company-specific risk be diversified away by investing in both TRADEDOUBLER 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 TRADEDOUBLER and FIRST NATIONAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRADEDOUBLER AB SK and FIRST NATIONAL FIN, you can compare the effects of market volatilities on TRADEDOUBLER 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 TRADEDOUBLER with a short position of FIRST NATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRADEDOUBLER and FIRST NATIONAL.
Diversification Opportunities for TRADEDOUBLER and FIRST NATIONAL
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between TRADEDOUBLER and FIRST is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding TRADEDOUBLER AB SK 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 TRADEDOUBLER 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 TRADEDOUBLER AB SK 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 TRADEDOUBLER i.e., TRADEDOUBLER and FIRST NATIONAL go up and down completely randomly.
Pair Corralation between TRADEDOUBLER and FIRST NATIONAL
Assuming the 90 days horizon TRADEDOUBLER is expected to generate 4.41 times less return on investment than FIRST NATIONAL. In addition to that, TRADEDOUBLER is 1.77 times more volatile than FIRST NATIONAL FIN. It trades about 0.0 of its total potential returns per unit of risk. FIRST NATIONAL FIN is currently generating about 0.03 per unit of volatility. If you would invest 2,115 in FIRST NATIONAL FIN on October 5, 2024 and sell it today you would earn a total of 525.00 from holding FIRST NATIONAL FIN or generate 24.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
TRADEDOUBLER AB SK vs. FIRST NATIONAL FIN
Performance |
Timeline |
TRADEDOUBLER AB SK |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
FIRST NATIONAL FIN |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
TRADEDOUBLER and FIRST NATIONAL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TRADEDOUBLER and FIRST NATIONAL
The main advantage of trading using opposite TRADEDOUBLER and FIRST NATIONAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRADEDOUBLER 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 TRADEDOUBLER AB SK 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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