Correlation Between First Bancorp and KS Bancorp
Can any of the company-specific risk be diversified away by investing in both First Bancorp and KS 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 Bancorp and KS Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Bancorp and KS Bancorp, you can compare the effects of market volatilities on First Bancorp and KS 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 Bancorp with a short position of KS Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancorp and KS Bancorp.
Diversification Opportunities for First Bancorp and KS Bancorp
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and KSBI is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding First Bancorp and KS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KS Bancorp and First Bancorp 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 Bancorp are associated (or correlated) with KS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KS Bancorp has no effect on the direction of First Bancorp i.e., First Bancorp and KS Bancorp go up and down completely randomly.
Pair Corralation between First Bancorp and KS Bancorp
Given the investment horizon of 90 days First Bancorp is expected to generate 1.05 times more return on investment than KS Bancorp. However, First Bancorp is 1.05 times more volatile than KS Bancorp. It trades about 0.02 of its potential returns per unit of risk. KS Bancorp is currently generating about 0.01 per unit of risk. If you would invest 4,497 in First Bancorp on August 27, 2024 and sell it today you would earn a total of 315.00 from holding First Bancorp or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 67.34% |
| Values | Daily Returns |
First Bancorp vs. KS Bancorp
Performance |
| Timeline |
| First Bancorp |
| KS Bancorp |
First Bancorp and KS Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bancorp and KS Bancorp
The main advantage of trading using opposite First Bancorp and KS Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancorp position performs unexpectedly, KS 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 KS Bancorp will offset losses from the drop in KS Bancorp's long position.| First Bancorp vs. Fifth Third Bancorp | First Bancorp vs. Zions Bancorporation | First Bancorp vs. Huntington Bancshares Incorporated | First Bancorp vs. PNC Financial Services |
| KS Bancorp vs. Carter Bank and | KS Bancorp vs. Blue Ridge Bankshares | KS Bancorp vs. First Bancorp | KS Bancorp vs. Truist Financial Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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