Correlation Between First Business and Superior Uniform
Can any of the company-specific risk be diversified away by investing in both First Business and Superior Uniform 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 Superior Uniform 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 Superior Uniform Group, you can compare the effects of market volatilities on First Business and Superior Uniform 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 Superior Uniform. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Business and Superior Uniform.
Diversification Opportunities for First Business and Superior Uniform
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Superior is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding First Business Financial and Superior Uniform Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Uniform 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 Superior Uniform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Uniform has no effect on the direction of First Business i.e., First Business and Superior Uniform go up and down completely randomly.
Pair Corralation between First Business and Superior Uniform
Given the investment horizon of 90 days First Business Financial is expected to generate 1.22 times more return on investment than Superior Uniform. However, First Business is 1.22 times more volatile than Superior Uniform Group. It trades about 0.21 of its potential returns per unit of risk. Superior Uniform Group is currently generating about 0.22 per unit of risk. If you would invest 4,403 in First Business Financial on August 30, 2024 and sell it today you would earn a total of 648.00 from holding First Business Financial or generate 14.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Business Financial vs. Superior Uniform Group
Performance |
| Timeline |
| First Business Financial |
| Superior Uniform |
First Business and Superior Uniform Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Business and Superior Uniform
The main advantage of trading using opposite First Business and Superior Uniform positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Business position performs unexpectedly, Superior Uniform 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 Superior Uniform will offset losses from the drop in Superior Uniform'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 |
| Superior Uniform vs. Lakeland Industries | Superior Uniform vs. Jerash Holdings | Superior Uniform vs. G III Apparel Group | Superior Uniform vs. JX Luxventure Limited |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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