Correlation Between First Capital and CF Bankshares
Can any of the company-specific risk be diversified away by investing in both First Capital and CF Bankshares 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 CF Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Capital and CF Bankshares, you can compare the effects of market volatilities on First Capital and CF Bankshares 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 CF Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and CF Bankshares.
Diversification Opportunities for First Capital and CF Bankshares
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and CFBK is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and CF Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Bankshares 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 CF Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Bankshares has no effect on the direction of First Capital i.e., First Capital and CF Bankshares go up and down completely randomly.
Pair Corralation between First Capital and CF Bankshares
Given the investment horizon of 90 days First Capital is expected to generate 1.04 times more return on investment than CF Bankshares. However, First Capital is 1.04 times more volatile than CF Bankshares. It trades about 0.05 of its potential returns per unit of risk. CF Bankshares is currently generating about 0.04 per unit of risk. If you would invest 2,679 in First Capital on November 9, 2024 and sell it today you would earn a total of 670.00 from holding First Capital or generate 25.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.87% |
| Values | Daily Returns |
First Capital vs. CF Bankshares
Performance |
| Timeline |
| First Capital |
| CF Bankshares |
First Capital and CF Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and CF Bankshares
The main advantage of trading using opposite First Capital and CF Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, CF Bankshares 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 CF Bankshares will offset losses from the drop in CF Bankshares' 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 |
| CF Bankshares vs. Magyar Bancorp | CF Bankshares vs. Home Federal Bancorp | CF Bankshares vs. Community West Bancshares | CF Bankshares vs. First Financial Northwest |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Stocks Directory Find actively traded stocks across global markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |