Correlation Between Rational Dividend and First Foundation

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

By analyzing existing cross correlation between Rational Dividend Capture and First Foundation Total, you can compare the effects of market volatilities on Rational Dividend and First Foundation 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 Rational Dividend with a short position of First Foundation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational Dividend and First Foundation.

Diversification Opportunities for Rational Dividend and First Foundation

-0.16

Correlation Coefficient

Rational Dividend  First Foundation

Good diversification

The 3 months correlation between Rational and First is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Rational Dividend Capture and First Foundation Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Foundation Total and Rational Dividend 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 Rational Dividend Capture are associated (or correlated) with First Foundation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Foundation Total has no effect on the direction of Rational Dividend i.e., Rational Dividend and First Foundation go up and down completely randomly.

Pair Corralation between Rational Dividend and First Foundation

Assuming the 90 days horizon Rational Dividend Capture is expected to generate 1.05 times more return on investment than First Foundation. However, Rational Dividend is 1.05 times more volatile than First Foundation Total. It trades about 0.17 of its potential returns per unit of risk. First Foundation Total is currently generating about -0.04 per unit of risk. If you would invest  1,008  in Rational Dividend Capture on July 2, 2025 and sell it today you would earn a total of  54.00  from holding Rational Dividend Capture or generate 5.36% return on investment over 90 days.

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

Rational Dividend Capture  vs.  First Foundation Total

Rational Dividend Capture

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rational Dividend Capture are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Rational Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Foundation Total

Risk-Adjusted Performance

Weakest

Over the last 90 days First Foundation Total has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, First Foundation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rational Dividend and First Foundation

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

The idea behind Rational Dividend Capture and First Foundation Total 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.