Correlation Between First Bancshares, and Renasant
Can any of the company-specific risk be diversified away by investing in both First Bancshares, and Renasant 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 Renasant 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 Renasant, you can compare the effects of market volatilities on First Bancshares, and Renasant 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 Renasant. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancshares, and Renasant.
Diversification Opportunities for First Bancshares, and Renasant
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between First and Renasant is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding The First Bancshares, and Renasant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renasant 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 Renasant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renasant has no effect on the direction of First Bancshares, i.e., First Bancshares, and Renasant go up and down completely randomly.
Pair Corralation between First Bancshares, and Renasant
Given the investment horizon of 90 days The First Bancshares, is expected to generate 1.05 times more return on investment than Renasant. However, First Bancshares, is 1.05 times more volatile than Renasant. It trades about 0.17 of its potential returns per unit of risk. Renasant is currently generating about 0.15 per unit of risk. If you would invest 3,403 in The First Bancshares, on August 29, 2024 and sell it today you would earn a total of 404.00 from holding The First Bancshares, or generate 11.87% 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. Renasant
Performance |
| Timeline |
| First Bancshares, |
| Renasant |
First Bancshares, and Renasant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bancshares, and Renasant
The main advantage of trading using opposite First Bancshares, and Renasant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancshares, position performs unexpectedly, Renasant 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 Renasant will offset losses from the drop in Renasant's long position.The idea behind The First Bancshares, and Renasant pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Global Correlations Find global opportunities by holding instruments from different markets |