Correlation Between Bank of San Francisco and First Bankers
Can any of the company-specific risk be diversified away by investing in both Bank of San Francisco and First Bankers 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 Bank of San Francisco and First Bankers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of San and First Bankers Trustshares, you can compare the effects of market volatilities on Bank of San Francisco and First Bankers 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 Bank of San Francisco with a short position of First Bankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of San Francisco and First Bankers.
Diversification Opportunities for Bank of San Francisco and First Bankers
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and First is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank of San and First Bankers Trustshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bankers Trustshares and Bank of San Francisco 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 Bank of San are associated (or correlated) with First Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bankers Trustshares has no effect on the direction of Bank of San Francisco i.e., Bank of San Francisco and First Bankers go up and down completely randomly.
Pair Corralation between Bank of San Francisco and First Bankers
Given the investment horizon of 90 days Bank of San Francisco is expected to generate 2.0 times less return on investment than First Bankers. But when comparing it to its historical volatility, Bank of San is 1.38 times less risky than First Bankers. It trades about 0.06 of its potential returns per unit of risk. First Bankers Trustshares is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,452 in First Bankers Trustshares on September 1, 2024 and sell it today you would earn a total of 233.00 from holding First Bankers Trustshares or generate 16.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of San vs. First Bankers Trustshares
Performance |
| Timeline |
| Bank of San Francisco |
| First Bankers Trustshares |
Bank of San Francisco and First Bankers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of San Francisco and First Bankers
The main advantage of trading using opposite Bank of San Francisco and First Bankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of San Francisco position performs unexpectedly, First Bankers 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 Bankers will offset losses from the drop in First Bankers' long position.| Bank of San Francisco vs. Pioneer Bankcorp | Bank of San Francisco vs. Liberty Northwest Bancorp | Bank of San Francisco vs. Summit Bancshares | Bank of San Francisco vs. Washington Business Bank |
| First Bankers vs. Greenville Federal Financial | First Bankers vs. First Ottawa Bancshares | First Bankers vs. Coastal Carolina Bancshares | First Bankers vs. Citizens Bancorp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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