Correlation Between First National and Storage Vault

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

Diversification Opportunities for First National and Storage Vault

-0.61

Correlation Coefficient

First National  Storage Vault

Excellent diversification

The 3 months correlation between First and Storage is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Storage Vault Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storage Vault Canada 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 Storage Vault. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storage Vault Canada has no effect on the direction of First National i.e., First National and Storage Vault go up and down completely randomly.

Pair Corralation between First National and Storage Vault

Assuming the 90 days trading horizon First National Financial is expected to generate 1.5 times more return on investment than Storage Vault. However, First National is 1.5 times more volatile than Storage Vault Canada. It trades about 0.2 of its potential returns per unit of risk. Storage Vault Canada is currently generating about -0.18 per unit of risk. If you would invest  1,448  in First National Financial on September 25, 2024 and sell it today you would earn a total of  127.00  from holding First National Financial or generate 8.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

First National Financial  vs.  Storage Vault Canada

First National Financial

Risk-Adjusted Performance

7 of 100

OK

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 abnormal basic indicators, First National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Storage Vault Canada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Storage Vault Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with First National and Storage Vault

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

The idea behind First National Financial and Storage Vault Canada 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.