Correlation Between First Capital and BCB Bancorp
Can any of the company-specific risk be diversified away by investing in both First Capital and BCB Bancorp 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 BCB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Capital and BCB Bancorp, you can compare the effects of market volatilities on First Capital and BCB Bancorp 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 BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and BCB Bancorp.
Diversification Opportunities for First Capital and BCB Bancorp
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and BCB is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of First Capital i.e., First Capital and BCB Bancorp go up and down completely randomly.
Pair Corralation between First Capital and BCB Bancorp
Given the investment horizon of 90 days First Capital is expected to under-perform the BCB Bancorp. In addition to that, First Capital is 1.13 times more volatile than BCB Bancorp. It trades about -0.19 of its total potential returns per unit of risk. BCB Bancorp is currently generating about 0.27 per unit of volatility. If you would invest 1,187 in BCB Bancorp on September 2, 2024 and sell it today you would earn a total of 140.00 from holding BCB Bancorp or generate 11.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Capital vs. BCB Bancorp
Performance |
| Timeline |
| First Capital |
| BCB Bancorp |
First Capital and BCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and BCB Bancorp
The main advantage of trading using opposite First Capital and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.| First Capital vs. Affinity Bancshares | First Capital vs. Auburn National Bancorporation | First Capital vs. BayCom Corp | First Capital vs. Community West Bancshares |
| BCB Bancorp vs. Provident Financial Services | BCB Bancorp vs. First Mid Illinois | BCB Bancorp vs. ConnectOne Bancorp | BCB Bancorp vs. Finward Bancorp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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