Correlation Between First Business and Hancock Whitney
Can any of the company-specific risk be diversified away by investing in both First Business and Hancock Whitney 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 Hancock Whitney 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 Hancock Whitney Corp, you can compare the effects of market volatilities on First Business and Hancock Whitney 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 Hancock Whitney. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Business and Hancock Whitney.
Diversification Opportunities for First Business and Hancock Whitney
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Hancock is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding First Business Financial and Hancock Whitney Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hancock Whitney Corp 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 Hancock Whitney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hancock Whitney Corp has no effect on the direction of First Business i.e., First Business and Hancock Whitney go up and down completely randomly.
Pair Corralation between First Business and Hancock Whitney
Given the investment horizon of 90 days First Business Financial is expected to generate 0.95 times more return on investment than Hancock Whitney. However, First Business Financial is 1.05 times less risky than Hancock Whitney. It trades about 0.04 of its potential returns per unit of risk. Hancock Whitney Corp is currently generating about 0.03 per unit of risk. If you would invest 3,547 in First Business Financial on August 26, 2024 and sell it today you would earn a total of 1,478 from holding First Business Financial or generate 41.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Business Financial vs. Hancock Whitney Corp
Performance |
| Timeline |
| First Business Financial |
| Hancock Whitney Corp |
First Business and Hancock Whitney Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Business and Hancock Whitney
The main advantage of trading using opposite First Business and Hancock Whitney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Business position performs unexpectedly, Hancock Whitney 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 Hancock Whitney will offset losses from the drop in Hancock Whitney'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 |
| Hancock Whitney vs. Home Bancorp | Hancock Whitney vs. First Business Financial | Hancock Whitney vs. LINKBANCORP | Hancock Whitney vs. Great Southern Bancorp |
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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