Correlation Between First Bancorp and Waterstone Financial
Can any of the company-specific risk be diversified away by investing in both First Bancorp and Waterstone Financial 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 Waterstone Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Bancorp and Waterstone Financial, you can compare the effects of market volatilities on First Bancorp and Waterstone Financial 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 Waterstone Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancorp and Waterstone Financial.
Diversification Opportunities for First Bancorp and Waterstone Financial
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Waterstone is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding First Bancorp and Waterstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waterstone Financial 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 Waterstone Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waterstone Financial has no effect on the direction of First Bancorp i.e., First Bancorp and Waterstone Financial go up and down completely randomly.
Pair Corralation between First Bancorp and Waterstone Financial
Considering the 90-day investment horizon First Bancorp is expected to generate 1.05 times more return on investment than Waterstone Financial. However, First Bancorp is 1.05 times more volatile than Waterstone Financial. It trades about 0.06 of its potential returns per unit of risk. Waterstone Financial is currently generating about 0.01 per unit of risk. If you would invest 1,317 in First Bancorp on August 27, 2024 and sell it today you would earn a total of 843.00 from holding First Bancorp or generate 64.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Bancorp vs. Waterstone Financial
Performance |
| Timeline |
| First Bancorp |
| Waterstone Financial |
First Bancorp and Waterstone Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bancorp and Waterstone Financial
The main advantage of trading using opposite First Bancorp and Waterstone Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancorp position performs unexpectedly, Waterstone Financial 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 Waterstone Financial will offset losses from the drop in Waterstone Financial's long position.| First Bancorp vs. Fifth Third Bancorp | First Bancorp vs. Zions Bancorporation | First Bancorp vs. Huntington Bancshares Incorporated | First Bancorp vs. Comerica |
| Waterstone Financial vs. National Bank Holdings | Waterstone Financial vs. Community West Bancshares | Waterstone Financial vs. Financial Institutions | Waterstone Financial vs. Kearny 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |