Correlation Between ESSA Bancorp and First Bancshares,
Can any of the company-specific risk be diversified away by investing in both ESSA Bancorp 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 ESSA Bancorp and First Bancshares, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSA Bancorp and The First Bancshares,, you can compare the effects of market volatilities on ESSA Bancorp 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 ESSA Bancorp with a short position of First Bancshares,. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSA Bancorp and First Bancshares,.
Diversification Opportunities for ESSA Bancorp and First Bancshares,
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ESSA and First is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ESSA Bancorp and The First Bancshares, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancshares, and ESSA Bancorp 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 ESSA Bancorp 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 ESSA Bancorp i.e., ESSA Bancorp and First Bancshares, go up and down completely randomly.
Pair Corralation between ESSA Bancorp and First Bancshares,
Given the investment horizon of 90 days ESSA Bancorp is expected to generate 1.16 times less return on investment than First Bancshares,. In addition to that, ESSA Bancorp is 1.19 times more volatile than The First Bancshares,. It trades about 0.05 of its total potential returns per unit of risk. The First Bancshares, is currently generating about 0.07 per unit of volatility. If you would invest 2,437 in The First Bancshares, on August 28, 2024 and sell it today you would earn a total of 1,385 from holding The First Bancshares, or generate 56.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESSA Bancorp vs. The First Bancshares,
Performance |
| Timeline |
| ESSA Bancorp |
| First Bancshares, |
ESSA Bancorp and First Bancshares, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSA Bancorp and First Bancshares,
The main advantage of trading using opposite ESSA Bancorp and First Bancshares, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSA Bancorp 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.| ESSA Bancorp vs. Community West Bancshares | ESSA Bancorp vs. First Northwest Bancorp | ESSA Bancorp vs. First Community | ESSA Bancorp vs. Oak Valley 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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