Correlation Between First Bancorp and ST Bancorp
Can any of the company-specific risk be diversified away by investing in both First Bancorp and ST 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 ST 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 ST Bancorp, you can compare the effects of market volatilities on First Bancorp and ST 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 ST Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancorp and ST Bancorp.
Diversification Opportunities for First Bancorp and ST Bancorp
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and STBA is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding First Bancorp and ST Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ST 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 ST Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ST Bancorp has no effect on the direction of First Bancorp i.e., First Bancorp and ST Bancorp go up and down completely randomly.
Pair Corralation between First Bancorp and ST Bancorp
Considering the 90-day investment horizon First Bancorp is expected to generate 0.98 times more return on investment than ST Bancorp. However, First Bancorp is 1.02 times less risky than ST Bancorp. It trades about 0.06 of its potential returns per unit of risk. ST Bancorp is currently generating about 0.04 per unit of risk. If you would invest 1,315 in First Bancorp on August 24, 2024 and sell it today you would earn a total of 787.00 from holding First Bancorp or generate 59.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Bancorp vs. ST Bancorp
Performance |
| Timeline |
| First Bancorp |
| ST Bancorp |
First Bancorp and ST Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bancorp and ST Bancorp
The main advantage of trading using opposite First Bancorp and ST Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancorp position performs unexpectedly, ST 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 ST Bancorp will offset losses from the drop in ST Bancorp's long position.| First Bancorp vs. Franklin Financial Services | First Bancorp vs. National Bank Holdings | First Bancorp vs. Bankwell Financial Group | First Bancorp vs. Finward Bancorp |
| ST Bancorp vs. CrossFirst Bankshares | ST Bancorp vs. Enterprise Financial Services | ST Bancorp vs. The First Bancshares, | ST Bancorp vs. First Bancorp |
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
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |