Correlation Between First National and New Destiny

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

Diversification Opportunities for First National and New Destiny

-0.81

Correlation Coefficient

First National  New Destiny

Pay attention - limited upside

The 3 months correlation between First and New is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and New Destiny Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Destiny Mining 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 New Destiny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Destiny Mining has no effect on the direction of First National i.e., First National and New Destiny go up and down completely randomly.

Pair Corralation between First National and New Destiny

Assuming the 90 days trading horizon First National Financial is expected to generate 0.24 times more return on investment than New Destiny. However, First National Financial is 4.19 times less risky than New Destiny. It trades about 0.1 of its potential returns per unit of risk. New Destiny Mining is currently generating about -0.19 per unit of risk. If you would invest  1,447  in First National Financial on September 22, 2024 and sell it today you would earn a total of  123.00  from holding First National Financial or generate 8.5% return on investment over 90 days.

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

First National Financial  vs.  New Destiny Mining

First National Financial

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, First National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

New Destiny Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Destiny Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with First National and New Destiny

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

The idea behind First National Financial and New Destiny Mining 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.