Correlation Between First Business and Peoples Bancorp
Can any of the company-specific risk be diversified away by investing in both First Business and Peoples 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 Business and Peoples Bancorp 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 Peoples Bancorp, you can compare the effects of market volatilities on First Business and Peoples 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 Business with a short position of Peoples Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Business and Peoples Bancorp.
Diversification Opportunities for First Business and Peoples Bancorp
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Peoples is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding First Business Financial and Peoples Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Bancorp 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 Peoples Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Bancorp has no effect on the direction of First Business i.e., First Business and Peoples Bancorp go up and down completely randomly.
Pair Corralation between First Business and Peoples Bancorp
Given the investment horizon of 90 days First Business Financial is expected to generate 1.22 times more return on investment than Peoples Bancorp. However, First Business is 1.22 times more volatile than Peoples Bancorp. It trades about 0.7 of its potential returns per unit of risk. Peoples Bancorp is currently generating about 0.33 per unit of risk. If you would invest 4,438 in First Business Financial on November 9, 2024 and sell it today you would earn a total of 1,197 from holding First Business Financial or generate 26.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Business Financial vs. Peoples Bancorp
Performance |
| Timeline |
| First Business Financial |
| Peoples Bancorp |
First Business and Peoples Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Business and Peoples Bancorp
The main advantage of trading using opposite First Business and Peoples Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Business position performs unexpectedly, Peoples 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 Peoples Bancorp will offset losses from the drop in Peoples Bancorp'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 |
| Peoples Bancorp vs. Eagle Bancorp | Peoples Bancorp vs. Northrim BanCorp | Peoples Bancorp vs. United Bankshares | Peoples Bancorp vs. Pacific Premier 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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |