Correlation Between First Business and Parke Bancorp
Can any of the company-specific risk be diversified away by investing in both First Business and Parke 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 Parke 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 Parke Bancorp, you can compare the effects of market volatilities on First Business and Parke 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 Parke Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Business and Parke Bancorp.
Diversification Opportunities for First Business and Parke Bancorp
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Parke is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding First Business Financial and Parke Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parke 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 Parke Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parke Bancorp has no effect on the direction of First Business i.e., First Business and Parke Bancorp go up and down completely randomly.
Pair Corralation between First Business and Parke Bancorp
Given the investment horizon of 90 days First Business Financial is expected to generate 1.02 times more return on investment than Parke Bancorp. However, First Business is 1.02 times more volatile than Parke Bancorp. It trades about 0.04 of its potential returns per unit of risk. Parke Bancorp is currently generating about 0.03 per unit of risk. If you would invest 3,546 in First Business Financial on August 27, 2024 and sell it today you would earn a total of 1,502 from holding First Business Financial or generate 42.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Business Financial vs. Parke Bancorp
Performance |
| Timeline |
| First Business Financial |
| Parke Bancorp |
First Business and Parke Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Business and Parke Bancorp
The main advantage of trading using opposite First Business and Parke Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Business position performs unexpectedly, Parke 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 Parke Bancorp will offset losses from the drop in Parke Bancorp's long position.| First Business vs. Fifth Third Bancorp | First Business vs. Zions Bancorporation | First Business vs. Huntington Bancshares Incorporated | First Business vs. PNC Financial Services |
| Parke Bancorp vs. Sound Financial Bancorp | Parke Bancorp vs. Finward Bancorp | Parke Bancorp vs. Franklin Financial Services | Parke Bancorp vs. Community West Bancshares |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |