Correlation Between First Capital and Piraeus Bank
Can any of the company-specific risk be diversified away by investing in both First Capital and Piraeus Bank 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 Piraeus Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Capital and Piraeus Bank SA, you can compare the effects of market volatilities on First Capital and Piraeus Bank 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 Piraeus Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and Piraeus Bank.
Diversification Opportunities for First Capital and Piraeus Bank
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Piraeus is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and Piraeus Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piraeus Bank SA 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 Piraeus Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piraeus Bank SA has no effect on the direction of First Capital i.e., First Capital and Piraeus Bank go up and down completely randomly.
Pair Corralation between First Capital and Piraeus Bank
Given the investment horizon of 90 days First Capital is expected to under-perform the Piraeus Bank. But the stock apears to be less risky and, when comparing its historical volatility, First Capital is 1.05 times less risky than Piraeus Bank. The stock trades about -0.03 of its potential returns per unit of risk. The Piraeus Bank SA is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 410.00 in Piraeus Bank SA on October 29, 2024 and sell it today you would earn a total of 67.00 from holding Piraeus Bank SA or generate 16.34% 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. Piraeus Bank SA
Performance |
| Timeline |
| First Capital |
| Piraeus Bank SA |
First Capital and Piraeus Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and Piraeus Bank
The main advantage of trading using opposite First Capital and Piraeus Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, Piraeus Bank 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 Piraeus Bank will offset losses from the drop in Piraeus Bank's 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 |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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