Correlation Between First Bankers and Century Next
Can any of the company-specific risk be diversified away by investing in both First Bankers and Century Next 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 Bankers and Century Next into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Bankers Trustshares and Century Next Financial, you can compare the effects of market volatilities on First Bankers and Century Next 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 Bankers with a short position of Century Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bankers and Century Next.
Diversification Opportunities for First Bankers and Century Next
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Century is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding First Bankers Trustshares and Century Next Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Next Financial and First Bankers 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 Bankers Trustshares are associated (or correlated) with Century Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Next Financial has no effect on the direction of First Bankers i.e., First Bankers and Century Next go up and down completely randomly.
Pair Corralation between First Bankers and Century Next
Given the investment horizon of 90 days First Bankers Trustshares is expected to under-perform the Century Next. In addition to that, First Bankers is 1.74 times more volatile than Century Next Financial. It trades about -0.01 of its total potential returns per unit of risk. Century Next Financial is currently generating about 0.07 per unit of volatility. If you would invest 2,850 in Century Next Financial on August 29, 2024 and sell it today you would earn a total of 1,025 from holding Century Next Financial or generate 35.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 75.12% |
| Values | Daily Returns |
First Bankers Trustshares vs. Century Next Financial
Performance |
| Timeline |
| First Bankers Trustshares |
| Century Next Financial |
First Bankers and Century Next Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bankers and Century Next
The main advantage of trading using opposite First Bankers and Century Next positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bankers position performs unexpectedly, Century Next 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 Century Next will offset losses from the drop in Century Next's long position.| First Bankers vs. Greenville Federal Financial | First Bankers vs. First Ottawa Bancshares | First Bankers vs. Coastal Carolina Bancshares | First Bankers vs. Citizens Bancorp Investment |
| Century Next vs. Citizens Financial Corp | Century Next vs. Triad Business Bank | Century Next vs. First Ottawa Bancshares | Century Next vs. CCSB 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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