Correlation Between First Asset and Rubicon Organics

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

By analyzing existing cross correlation between First Asset Morningstar and Rubicon Organics, you can compare the effects of market volatilities on First Asset and Rubicon Organics 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 Asset with a short position of Rubicon Organics. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and Rubicon Organics.

Diversification Opportunities for First Asset and Rubicon Organics

-0.35

Correlation Coefficient

First Asset  Rubicon Organics

Very good diversification

The 3 months correlation between First and Rubicon is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Morningstar and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics and First Asset 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 Asset Morningstar are associated (or correlated) with Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of First Asset i.e., First Asset and Rubicon Organics go up and down completely randomly.

Pair Corralation between First Asset and Rubicon Organics

Assuming the 90 days trading horizon First Asset is expected to generate 2.52 times less return on investment than Rubicon Organics. But when comparing it to its historical volatility, First Asset Morningstar is 4.0 times less risky than Rubicon Organics. It trades about 0.05 of its potential returns per unit of risk. Rubicon Organics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  42.00  in Rubicon Organics on February 15, 2025 and sell it today you would earn a total of  0.00  from holding Rubicon Organics or generate 0.0% return on investment over 90 days.

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

First Asset Morningstar  vs.  Rubicon Organics

First Asset Morningstar

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Asset Morningstar are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, First Asset is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Rubicon Organics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Organics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Rubicon Organics may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with First Asset and Rubicon Organics

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

The idea behind First Asset Morningstar and Rubicon Organics 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.