Correlation Between Stampede Drilling and First National

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

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

Diversification Opportunities for Stampede Drilling and First National

-0.64

Correlation Coefficient

Stampede Drilling  First National

Excellent diversification

The 3 months correlation between Stampede and First is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Stampede Drilling and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Financial and Stampede Drilling 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 Stampede Drilling 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 Financial has no effect on the direction of Stampede Drilling i.e., Stampede Drilling and First National go up and down completely randomly.

Pair Corralation between Stampede Drilling and First National

Assuming the 90 days horizon Stampede Drilling is expected to under-perform the First National. In addition to that, Stampede Drilling is 3.14 times more volatile than First National Financial. It trades about 0.0 of its total potential returns per unit of risk. First National Financial is currently generating about 0.09 per unit of volatility. If you would invest  1,452  in First National Financial on September 12, 2024 and sell it today you would earn a total of  93.00  from holding First National Financial or generate 6.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Stampede Drilling  vs.  First National Financial

Stampede Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stampede Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Stampede Drilling is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

First National Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 6 (%) 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.

Pair Trading with Stampede Drilling and First National

The main advantage of trading using opposite Stampede Drilling and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stampede Drilling 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 Stampede Drilling and First National Financial 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.