Correlation Between First National and E L

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

Diversification Opportunities for First National and E L

0.75

Correlation Coefficient

First National  E L

Poor diversification

The 3 months correlation between First and ELF-PF is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and E L Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E L Financial 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 E L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E L Financial has no effect on the direction of First National i.e., First National and E L go up and down completely randomly.

Pair Corralation between First National and E L

Assuming the 90 days trading horizon First National Financial is expected to generate 4.48 times more return on investment than E L. However, First National is 4.48 times more volatile than E L Financial Corp. It trades about 0.19 of its potential returns per unit of risk. E L Financial Corp is currently generating about 0.26 per unit of risk. If you would invest  1,521  in First National Financial on May 15, 2025 and sell it today you would earn a total of  389.00  from holding First National Financial or generate 25.58% return on investment over 90 days.

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

First National Financial  vs.  E L Financial Corp

First National Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, First National unveiled solid returns over the last few months and may actually be approaching a breakup point.

E L Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in E L Financial Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, E L may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with First National and E L

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

The idea behind First National Financial and E L Financial Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.