Correlation Between First Bancshares and North Dallas
Can any of the company-specific risk be diversified away by investing in both First Bancshares and North Dallas 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 North Dallas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Bancshares and North Dallas Bank, you can compare the effects of market volatilities on First Bancshares and North Dallas 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 North Dallas. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancshares and North Dallas.
Diversification Opportunities for First Bancshares and North Dallas
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and North is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding First Bancshares and North Dallas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Dallas 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 North Dallas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Dallas Bank has no effect on the direction of First Bancshares i.e., First Bancshares and North Dallas go up and down completely randomly.
Pair Corralation between First Bancshares and North Dallas
If you would invest 4,580 in North Dallas Bank on November 5, 2024 and sell it today you would earn a total of 420.00 from holding North Dallas Bank or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 5.56% |
| Values | Daily Returns |
First Bancshares vs. North Dallas Bank
Performance |
| Timeline |
| First Bancshares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| North Dallas Bank |
First Bancshares and North Dallas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bancshares and North Dallas
The main advantage of trading using opposite First Bancshares and North Dallas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancshares position performs unexpectedly, North Dallas 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 North Dallas will offset losses from the drop in North Dallas' 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 |
| North Dallas vs. CCSB Financial Corp | North Dallas vs. Delhi Bank Corp | North Dallas vs. Bank of Utica | North Dallas vs. First Community |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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