Correlation Between First Business and Greenville Federal
Can any of the company-specific risk be diversified away by investing in both First Business and Greenville Federal 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 Business and Greenville Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Business Financial and Greenville Federal Financial, you can compare the effects of market volatilities on First Business and Greenville Federal 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 Business with a short position of Greenville Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Business and Greenville Federal.
Diversification Opportunities for First Business and Greenville Federal
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Greenville is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding First Business Financial and Greenville Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenville Federal and First Business 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 Business Financial are associated (or correlated) with Greenville Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenville Federal has no effect on the direction of First Business i.e., First Business and Greenville Federal go up and down completely randomly.
Pair Corralation between First Business and Greenville Federal
Given the investment horizon of 90 days First Business Financial is expected to under-perform the Greenville Federal. In addition to that, First Business is 1.7 times more volatile than Greenville Federal Financial. It trades about -0.08 of its total potential returns per unit of risk. Greenville Federal Financial is currently generating about -0.12 per unit of volatility. If you would invest 730.00 in Greenville Federal Financial on January 13, 2025 and sell it today you would lose (30.00) from holding Greenville Federal Financial or give up 4.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Business Financial vs. Greenville Federal Financial
Performance |
| Timeline |
| First Business Financial |
| Greenville Federal |
First Business and Greenville Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Business and Greenville Federal
The main advantage of trading using opposite First Business and Greenville Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Business position performs unexpectedly, Greenville Federal 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 Greenville Federal will offset losses from the drop in Greenville Federal's long position.| First Business vs. Home Federal Bancorp | First Business vs. Lake Shore Bancorp | First Business vs. Old Point Financial | First Business vs. Parke 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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