Correlation Between First National and Arizona Metals

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

Diversification Opportunities for First National and Arizona Metals

-0.7

Correlation Coefficient

First National  Arizona Metals

Excellent diversification

The 3 months correlation between First and Arizona is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Arizona Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arizona Metals Corp 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 Arizona Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arizona Metals Corp has no effect on the direction of First National i.e., First National and Arizona Metals go up and down completely randomly.

Pair Corralation between First National and Arizona Metals

Assuming the 90 days trading horizon First National Financial is expected to generate 0.22 times more return on investment than Arizona Metals. However, First National Financial is 4.62 times less risky than Arizona Metals. It trades about 0.3 of its potential returns per unit of risk. Arizona Metals Corp is currently generating about -0.06 per unit of risk. If you would invest  1,897  in First National Financial on August 24, 2025 and sell it today you would earn a total of  403.00  from holding First National Financial or generate 21.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

First National Financial  vs.  Arizona Metals Corp

First National Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 24 (%) 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.

Arizona Metals Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days Arizona Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in December 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with First National and Arizona Metals

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

The idea behind First National Financial and Arizona Metals 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.