Correlation Between First Capital and Affinity Bancshares
Can any of the company-specific risk be diversified away by investing in both First Capital and Affinity 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 Capital and Affinity Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Capital and Affinity Bancshares, you can compare the effects of market volatilities on First Capital and Affinity 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 Capital with a short position of Affinity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and Affinity Bancshares.
Diversification Opportunities for First Capital and Affinity Bancshares
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and Affinity is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and Affinity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Bancshares and First Capital 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 Capital are associated (or correlated) with Affinity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity Bancshares has no effect on the direction of First Capital i.e., First Capital and Affinity Bancshares go up and down completely randomly.
Pair Corralation between First Capital and Affinity Bancshares
Given the investment horizon of 90 days First Capital is expected to generate 1.02 times more return on investment than Affinity Bancshares. However, First Capital is 1.02 times more volatile than Affinity Bancshares. It trades about 0.03 of its potential returns per unit of risk. Affinity Bancshares is currently generating about 0.03 per unit of risk. If you would invest 2,517 in First Capital on November 2, 2024 and sell it today you would earn a total of 658.97 from holding First Capital or generate 26.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.98% |
| Values | Daily Returns |
First Capital vs. Affinity Bancshares
Performance |
| Timeline |
| First Capital |
| Affinity Bancshares |
First Capital and Affinity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and Affinity Bancshares
The main advantage of trading using opposite First Capital and Affinity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, Affinity 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 Affinity Bancshares will offset losses from the drop in Affinity Bancshares' long position.| First Capital vs. Home Federal Bancorp | First Capital vs. First Financial Northwest | First Capital vs. First Northwest Bancorp | First Capital vs. Community West Bancshares |
| Affinity Bancshares vs. Home Federal Bancorp | Affinity Bancshares vs. Magyar Bancorp | Affinity Bancshares vs. Community West Bancshares |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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