Correlation Between Slate Grocery and First National

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

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

Diversification Opportunities for Slate Grocery and First National

-0.48

Correlation Coefficient

Slate Grocery  First National

Very good diversification

The 3 months correlation between Slate and First is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Slate Grocery REIT 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 Slate Grocery 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 Slate Grocery REIT 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 Slate Grocery i.e., Slate Grocery and First National go up and down completely randomly.

Pair Corralation between Slate Grocery and First National

Assuming the 90 days trading horizon Slate Grocery is expected to generate 12.6 times less return on investment than First National. But when comparing it to its historical volatility, Slate Grocery REIT is 1.94 times less risky than First National. It trades about 0.02 of its potential returns per unit of risk. First National Financial is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,637  in First National Financial on May 28, 2025 and sell it today you would earn a total of  288.00  from holding First National Financial or generate 17.59% return on investment over 90 days.

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

Slate Grocery REIT  vs.  First National Financial

Slate Grocery REIT

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Slate Grocery REIT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Slate Grocery is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, First National unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Slate Grocery and First National

The main advantage of trading using opposite Slate Grocery and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Slate Grocery 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 Slate Grocery REIT 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.