Correlation Between First National and Primaris Retail

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

Diversification Opportunities for First National and Primaris Retail

0.72

Correlation Coefficient

First National  Primaris Retail

Poor diversification

The 3 months correlation between First and Primaris is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Primaris Retail RE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primaris Retail RE 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 Primaris Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primaris Retail RE has no effect on the direction of First National i.e., First National and Primaris Retail go up and down completely randomly.

Pair Corralation between First National and Primaris Retail

Assuming the 90 days trading horizon First National Financial is expected to generate 1.29 times more return on investment than Primaris Retail. However, First National is 1.29 times more volatile than Primaris Retail RE. It trades about 0.16 of its potential returns per unit of risk. Primaris Retail RE is currently generating about 0.11 per unit of risk. If you would invest  1,452  in First National Financial on April 20, 2025 and sell it today you would earn a total of  193.00  from holding First National Financial or generate 13.29% 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.  Primaris Retail RE

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 12 (%) 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.

Primaris Retail RE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Primaris Retail RE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Primaris Retail may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with First National and Primaris Retail

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

The idea behind First National Financial and Primaris Retail RE 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.