Correlation Between First Bancshares and National Capital
Can any of the company-specific risk be diversified away by investing in both First Bancshares and National Capital 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 National Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Bancshares and National Capital Bank, you can compare the effects of market volatilities on First Bancshares and National Capital 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 National Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancshares and National Capital.
Diversification Opportunities for First Bancshares and National Capital
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and National is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding First Bancshares and National Capital Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Capital Bank 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 First Bancshares are associated (or correlated) with National Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Capital Bank has no effect on the direction of First Bancshares i.e., First Bancshares and National Capital go up and down completely randomly.
Pair Corralation between First Bancshares and National Capital
If you would invest 18,395 in National Capital Bank on August 28, 2024 and sell it today you would earn a total of 11,605 from holding National Capital Bank or generate 63.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 2.44% |
| Values | Daily Returns |
First Bancshares vs. National Capital Bank
Performance |
| Timeline |
| First Bancshares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| National Capital Bank |
First Bancshares and National Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bancshares and National Capital
The main advantage of trading using opposite First Bancshares and National Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancshares position performs unexpectedly, National Capital 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 National Capital will offset losses from the drop in National Capital's long position.| First Bancshares vs. Lewis Clark Bancorp | First Bancshares vs. Bank of Idaho | First Bancshares vs. Community Heritage Financial | First Bancshares vs. National Capital Bank |
| National Capital vs. Delhi Bank Corp | National Capital vs. CCSB Financial Corp | National Capital vs. Bank of Utica | National Capital vs. BEO 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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