Correlation Between Capitol Federal and First Community
Can any of the company-specific risk be diversified away by investing in both Capitol Federal and First Community 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 Capitol Federal and First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Federal Financial and First Community, you can compare the effects of market volatilities on Capitol Federal and First Community 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 Capitol Federal with a short position of First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Federal and First Community.
Diversification Opportunities for Capitol Federal and First Community
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capitol and First is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Federal Financial and First Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community and Capitol Federal 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 Capitol Federal Financial are associated (or correlated) with First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community has no effect on the direction of Capitol Federal i.e., Capitol Federal and First Community go up and down completely randomly.
Pair Corralation between Capitol Federal and First Community
Given the investment horizon of 90 days Capitol Federal Financial is expected to under-perform the First Community. In addition to that, Capitol Federal is 1.62 times more volatile than First Community. It trades about -0.01 of its total potential returns per unit of risk. First Community is currently generating about 0.03 per unit of volatility. If you would invest 825.00 in First Community on October 7, 2024 and sell it today you would earn a total of 115.00 from holding First Community or generate 13.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.66% |
| Values | Daily Returns |
Capitol Federal Financial vs. First Community
Performance |
| Timeline |
| Capitol Federal Financial |
| First Community |
Capitol Federal and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitol Federal and First Community
The main advantage of trading using opposite Capitol Federal and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Federal position performs unexpectedly, First Community 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 Community will offset losses from the drop in First Community's long position.| Capitol Federal vs. Independent Bank | Capitol Federal vs. BankFinancial | Capitol Federal vs. Business First Bancshares | Capitol Federal vs. First Bancorp |
| First Community vs. KeyCorp | First Community vs. Maplebear Common Stock | First Community vs. Webster Financial | First Community vs. Aquagold International |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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