Correlation Between Equity Bancshares, and First Foundation
Can any of the company-specific risk be diversified away by investing in both Equity Bancshares, and First Foundation 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 Equity Bancshares, and First Foundation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Bancshares, and First Foundation, you can compare the effects of market volatilities on Equity Bancshares, and First Foundation 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 Equity Bancshares, with a short position of First Foundation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Bancshares, and First Foundation.
Diversification Opportunities for Equity Bancshares, and First Foundation
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Equity and First is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Equity Bancshares, and First Foundation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Foundation and Equity Bancshares, 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 Equity Bancshares, are associated (or correlated) with First Foundation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Foundation has no effect on the direction of Equity Bancshares, i.e., Equity Bancshares, and First Foundation go up and down completely randomly.
Pair Corralation between Equity Bancshares, and First Foundation
Given the investment horizon of 90 days Equity Bancshares, is expected to under-perform the First Foundation. But the stock apears to be less risky and, when comparing its historical volatility, Equity Bancshares, is 1.39 times less risky than First Foundation. The stock trades about -0.21 of its potential returns per unit of risk. The First Foundation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 458.00 in First Foundation on January 9, 2025 and sell it today you would earn a total of 19.00 from holding First Foundation or generate 4.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Equity Bancshares, vs. First Foundation
Performance |
| Timeline |
| Equity Bancshares, |
| First Foundation |
Equity Bancshares, and First Foundation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Bancshares, and First Foundation
The main advantage of trading using opposite Equity Bancshares, and First Foundation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Bancshares, position performs unexpectedly, First Foundation 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 Foundation will offset losses from the drop in First Foundation's long position.| Equity Bancshares, vs. Camden National | Equity Bancshares, vs. Bank of Marin | Equity Bancshares, vs. Arrow Financial | Equity Bancshares, vs. Auburn National Bancorporation |
| First Foundation vs. Veritex Holdings | First Foundation vs. ConnectOne Bancorp | First Foundation vs. The First Bancshares, | First Foundation vs. First Mid Illinois |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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