Correlation Between First Bancshares and Washington Business
Can any of the company-specific risk be diversified away by investing in both First Bancshares and Washington Business 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 Washington Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Bancshares and Washington Business Bank, you can compare the effects of market volatilities on First Bancshares and Washington Business 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 Washington Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancshares and Washington Business.
Diversification Opportunities for First Bancshares and Washington Business
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Washington is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding First Bancshares and Washington Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Business 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 Washington Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Business Bank has no effect on the direction of First Bancshares i.e., First Bancshares and Washington Business go up and down completely randomly.
Pair Corralation between First Bancshares and Washington Business
If you would invest 3,600 in Washington Business Bank on November 2, 2024 and sell it today you would earn a total of 0.00 from holding Washington Business Bank or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Bancshares vs. Washington Business Bank
Performance |
| Timeline |
| First Bancshares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Washington Business Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
First Bancshares and Washington Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bancshares and Washington Business
The main advantage of trading using opposite First Bancshares and Washington Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancshares position performs unexpectedly, Washington Business 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 Washington Business will offset losses from the drop in Washington Business' 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 |
| Washington Business vs. National Capital Bank | Washington Business vs. Community Heritage Financial | Washington Business vs. Citizens Financial Corp | Washington Business vs. Bank of Idaho |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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