Correlation Between Communities First and Prime Meridian
Can any of the company-specific risk be diversified away by investing in both Communities First and Prime Meridian 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 Communities First and Prime Meridian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Communities First Financial and Prime Meridian Holding, you can compare the effects of market volatilities on Communities First and Prime Meridian 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 Communities First with a short position of Prime Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Communities First and Prime Meridian.
Diversification Opportunities for Communities First and Prime Meridian
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Communities and Prime is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Communities First Financial and Prime Meridian Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Meridian Holding and Communities First 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 Communities First Financial are associated (or correlated) with Prime Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Meridian Holding has no effect on the direction of Communities First i.e., Communities First and Prime Meridian go up and down completely randomly.
Pair Corralation between Communities First and Prime Meridian
If you would invest 2,329 in Prime Meridian Holding on August 25, 2024 and sell it today you would earn a total of 570.00 from holding Prime Meridian Holding or generate 24.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.45% |
| Values | Daily Returns |
Communities First Financial vs. Prime Meridian Holding
Performance |
| Timeline |
| Communities First |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Prime Meridian Holding |
Communities First and Prime Meridian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Communities First and Prime Meridian
The main advantage of trading using opposite Communities First and Prime Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Communities First position performs unexpectedly, Prime Meridian 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 Prime Meridian will offset losses from the drop in Prime Meridian's long position.| Communities First vs. Private Bancorp of | Communities First vs. CCSB Financial Corp | Communities First vs. Delhi Bank Corp | Communities First vs. Bank of Utica |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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