Correlation Between First National and Plumas Bancorp
Can any of the company-specific risk be diversified away by investing in both First National and Plumas Bancorp 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 First National and Plumas Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First National Bank and Plumas Bancorp, you can compare the effects of market volatilities on First National and Plumas Bancorp 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 First National with a short position of Plumas Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Plumas Bancorp.
Diversification Opportunities for First National and Plumas Bancorp
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Plumas is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding First National Bank and Plumas Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumas Bancorp and First National 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 First National Bank are associated (or correlated) with Plumas Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumas Bancorp has no effect on the direction of First National i.e., First National and Plumas Bancorp go up and down completely randomly.
Pair Corralation between First National and Plumas Bancorp
Given the investment horizon of 90 days First National is expected to generate 2.17 times less return on investment than Plumas Bancorp. In addition to that, First National is 1.7 times more volatile than Plumas Bancorp. It trades about 0.07 of its total potential returns per unit of risk. Plumas Bancorp is currently generating about 0.27 per unit of volatility. If you would invest 4,554 in Plumas Bancorp on September 13, 2024 and sell it today you would earn a total of 331.00 from holding Plumas Bancorp or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First National Bank vs. Plumas Bancorp
Performance |
| Timeline |
| First National Bank |
| Plumas Bancorp |
First National and Plumas Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First National and Plumas Bancorp
The main advantage of trading using opposite First National and Plumas Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National position performs unexpectedly, Plumas Bancorp 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 Plumas Bancorp will offset losses from the drop in Plumas Bancorp's long position.| First National vs. IF Bancorp | First National vs. LINKBANCORP | First National vs. Pathfinder Bancorp | First National vs. First Keystone Corp |
| Plumas Bancorp vs. Comerica | Plumas Bancorp vs. Truist Financial Corp | Plumas Bancorp vs. Fifth Third Bancorp | Plumas Bancorp vs. Zions Bancorporation |
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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