Correlation Between Alpine Banks and First National
Can any of the company-specific risk be diversified away by investing in both Alpine Banks 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 Alpine Banks and First National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alpine Banks of and First National Bank, you can compare the effects of market volatilities on Alpine Banks 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 Alpine Banks with a short position of First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpine Banks and First National.
Diversification Opportunities for Alpine Banks and First National
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alpine and First is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Alpine Banks of and First National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Bank and Alpine Banks 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 Alpine Banks of 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 Bank has no effect on the direction of Alpine Banks i.e., Alpine Banks and First National go up and down completely randomly.
Pair Corralation between Alpine Banks and First National
Assuming the 90 days horizon Alpine Banks of is expected to generate 0.42 times more return on investment than First National. However, Alpine Banks of is 2.4 times less risky than First National. It trades about 0.44 of its potential returns per unit of risk. First National Bank is currently generating about 0.03 per unit of risk. If you would invest 3,167 in Alpine Banks of on September 14, 2024 and sell it today you would earn a total of 257.00 from holding Alpine Banks of or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alpine Banks of vs. First National Bank
Performance |
| Timeline |
| Alpine Banks |
| First National Bank |
Alpine Banks and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alpine Banks and First National
The main advantage of trading using opposite Alpine Banks and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpine Banks 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 Alpine Banks of and First National Bank 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.| First National vs. IF Bancorp | First National vs. LINKBANCORP | First National vs. Pathfinder Bancorp | First National vs. First Keystone Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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