Correlation Between First Bancshares, and First Mid
Can any of the company-specific risk be diversified away by investing in both First Bancshares, and First Mid 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 Bancshares, and First Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The First Bancshares, and First Mid Illinois, you can compare the effects of market volatilities on First Bancshares, and First Mid 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 Bancshares, with a short position of First Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancshares, and First Mid.
Diversification Opportunities for First Bancshares, and First Mid
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding The First Bancshares, and First Mid Illinois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mid Illinois and First Bancshares, 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 The First Bancshares, are associated (or correlated) with First Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mid Illinois has no effect on the direction of First Bancshares, i.e., First Bancshares, and First Mid go up and down completely randomly.
Pair Corralation between First Bancshares, and First Mid
Given the investment horizon of 90 days First Bancshares, is expected to generate 1.3 times less return on investment than First Mid. In addition to that, First Bancshares, is 1.12 times more volatile than First Mid Illinois. It trades about 0.03 of its total potential returns per unit of risk. First Mid Illinois is currently generating about 0.04 per unit of volatility. If you would invest 3,170 in First Mid Illinois on September 3, 2024 and sell it today you would earn a total of 1,031 from holding First Mid Illinois or generate 32.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The First Bancshares, vs. First Mid Illinois
Performance |
| Timeline |
| First Bancshares, |
| First Mid Illinois |
First Bancshares, and First Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bancshares, and First Mid
The main advantage of trading using opposite First Bancshares, and First Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancshares, position performs unexpectedly, First Mid 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 First Mid will offset losses from the drop in First Mid's long position.| First Bancshares, vs. First Northwest Bancorp | First Bancshares, vs. Community West Bancshares | First Bancshares, vs. First Financial Northwest | First Bancshares, vs. Great Southern Bancorp |
| First Mid vs. JPMorgan Chase Co | First Mid vs. Citigroup | First Mid vs. Wells Fargo | First Mid vs. Toronto Dominion Bank |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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