Correlation Between Community Bank and First Bancshares,
Can any of the company-specific risk be diversified away by investing in both Community Bank and First Bancshares, 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 Community Bank and First Bancshares, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community Bank System and The First Bancshares,, you can compare the effects of market volatilities on Community Bank and First Bancshares, 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 Community Bank with a short position of First Bancshares,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Bank and First Bancshares,.
Diversification Opportunities for Community Bank and First Bancshares,
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Community and First is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Community Bank System and The First Bancshares, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancshares, and Community Bank 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 Community Bank System are associated (or correlated) with First Bancshares,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancshares, has no effect on the direction of Community Bank i.e., Community Bank and First Bancshares, go up and down completely randomly.
Pair Corralation between Community Bank and First Bancshares,
Considering the 90-day investment horizon Community Bank System is expected to under-perform the First Bancshares,. But the stock apears to be less risky and, when comparing its historical volatility, Community Bank System is 1.08 times less risky than First Bancshares,. The stock trades about -0.2 of its potential returns per unit of risk. The The First Bancshares, is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 3,666 in The First Bancshares, on November 27, 2024 and sell it today you would lose (60.00) from holding The First Bancshares, or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community Bank System vs. The First Bancshares,
Performance |
| Timeline |
| Community Bank System |
| First Bancshares, |
Community Bank and First Bancshares, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Bank and First Bancshares,
The main advantage of trading using opposite Community Bank and First Bancshares, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Bank position performs unexpectedly, First Bancshares, 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 Bancshares, will offset losses from the drop in First Bancshares,'s long position.| Community Bank vs. National Bank Holdings | Community Bank vs. Byline Bancorp | Community Bank vs. Home Bancorp | Community Bank vs. Finward Bancorp |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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