Correlation Between Alphabet and Bank First

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Can any of the company-specific risk be diversified away by investing in both Alphabet and Bank First 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 Alphabet and Bank First into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Cl A and Bank First National, you can compare the effects of market volatilities on Alphabet and Bank First 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 Alphabet with a short position of Bank First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Bank First.

Diversification Opportunities for Alphabet and Bank First

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Alphabet and Bank First is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Cl A and Bank First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank First National and Alphabet 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 Alphabet Cl A are associated (or correlated) with Bank First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank First National has no effect on the direction of Alphabet i.e., Alphabet and Bank First go up and down completely randomly.

Pair Corralation between Alphabet and Bank First

Assuming the 90 days horizon Alphabet Cl A is expected to under-perform the Bank First. In addition to that, Alphabet is 1.34 times more volatile than Bank First National. It trades about -0.32 of its total potential returns per unit of risk. Bank First National is currently generating about -0.16 per unit of volatility. If you would invest  8,061  in Bank First National on July 3, 2022 and sell it today you would lose (413.00)  from holding Bank First National or give up 5.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Alphabet Cl A  vs.  Bank First National

 Performance (%) 
       Timeline  
Alphabet Cl A 
Alphabet Performance
0 of 100
Over the last 90 days Alphabet Cl A has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively steady which may send shares a bit higher in November 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Alphabet Price Channel

Bank First National 
Bank First Performance
0 of 100
Over the last 90 days Bank First National has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Bank First is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Bank First Price Channel

Alphabet and Bank First Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alphabet and Bank First

The main advantage of trading using opposite Alphabet and Bank First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Bank First 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 Bank First will offset losses from the drop in Bank First's long position.
Alphabet vs. Tencent Holdings
The idea behind Alphabet Cl A and Bank First National 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.
Bank First vs. Amazon Inc
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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