Correlation Between First Bankers and Potomac Bancshares
Can any of the company-specific risk be diversified away by investing in both First Bankers and Potomac Bancshares 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 Potomac Bancshares 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 Potomac Bancshares, you can compare the effects of market volatilities on First Bankers and Potomac Bancshares 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 Potomac Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bankers and Potomac Bancshares.
Diversification Opportunities for First Bankers and Potomac Bancshares
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Potomac is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding First Bankers Trustshares and Potomac Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Potomac Bancshares 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 Potomac Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Potomac Bancshares has no effect on the direction of First Bankers i.e., First Bankers and Potomac Bancshares go up and down completely randomly.
Pair Corralation between First Bankers and Potomac Bancshares
Given the investment horizon of 90 days First Bankers Trustshares is expected to under-perform the Potomac Bancshares. In addition to that, First Bankers is 1.14 times more volatile than Potomac Bancshares. It trades about -0.01 of its total potential returns per unit of risk. Potomac Bancshares is currently generating about 0.0 per unit of volatility. If you would invest 1,700 in Potomac Bancshares on August 26, 2024 and sell it today you would lose (180.00) from holding Potomac Bancshares or give up 10.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.57% |
| Values | Daily Returns |
First Bankers Trustshares vs. Potomac Bancshares
Performance |
| Timeline |
| First Bankers Trustshares |
| Potomac Bancshares |
First Bankers and Potomac Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bankers and Potomac Bancshares
The main advantage of trading using opposite First Bankers and Potomac Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bankers position performs unexpectedly, Potomac Bancshares 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 Potomac Bancshares will offset losses from the drop in Potomac Bancshares' 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 |
| Potomac Bancshares vs. Invesco High Income | Potomac Bancshares vs. Blackrock Muniholdings Ny | Potomac Bancshares vs. MFS Investment Grade | Potomac Bancshares vs. Federated Premier Municipal |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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