Correlation Between Morguard North and First Capital

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

By analyzing existing cross correlation between Morguard North American and First Capital Real, you can compare the effects of market volatilities on Morguard North and First Capital 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 Morguard North with a short position of First Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morguard North and First Capital.

Diversification Opportunities for Morguard North and First Capital

0.84

Correlation Coefficient

Morguard North  First Capital

Very poor diversification

The 3 months correlation between Morguard and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Morguard North American and First Capital Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital Real and Morguard North 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 Morguard North American are associated (or correlated) with First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital Real has no effect on the direction of Morguard North i.e., Morguard North and First Capital go up and down completely randomly.

Pair Corralation between Morguard North and First Capital

Assuming the 90 days trading horizon Morguard North is expected to generate 1.37 times less return on investment than First Capital. In addition to that, Morguard North is 1.02 times more volatile than First Capital Real. It trades about 0.15 of its total potential returns per unit of risk. First Capital Real is currently generating about 0.21 per unit of volatility. If you would invest  1,658  in First Capital Real on April 25, 2025 and sell it today you would earn a total of  216.00  from holding First Capital Real or generate 13.03% return on investment over 90 days.

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

Morguard North American  vs.  First Capital Real

Morguard North American

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morguard North American are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Morguard North may actually be approaching a critical reversion point that can send shares even higher in August 2025.

First Capital Real

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Capital Real are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, First Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morguard North and First Capital

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

The idea behind Morguard North American and First Capital Real 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..