Correlation Between First Capital and First CommunityPFD
Can any of the company-specific risk be diversified away by investing in both First Capital and First CommunityPFD 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 First CommunityPFD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Capital and First Community, you can compare the effects of market volatilities on First Capital and First CommunityPFD 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 First CommunityPFD. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and First CommunityPFD.
Diversification Opportunities for First Capital and First CommunityPFD
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and First is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and First Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First CommunityPFD 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 First CommunityPFD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First CommunityPFD has no effect on the direction of First Capital i.e., First Capital and First CommunityPFD go up and down completely randomly.
Pair Corralation between First Capital and First CommunityPFD
Given the investment horizon of 90 days First Capital is expected to generate 1.52 times more return on investment than First CommunityPFD. However, First Capital is 1.52 times more volatile than First Community. It trades about 0.05 of its potential returns per unit of risk. First Community is currently generating about 0.03 per unit of risk. If you would invest 2,239 in First Capital on August 25, 2024 and sell it today you would earn a total of 1,039 from holding First Capital or generate 46.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 84.05% |
| Values | Daily Returns |
First Capital vs. First Community
Performance |
| Timeline |
| First Capital |
| First CommunityPFD |
First Capital and First CommunityPFD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and First CommunityPFD
The main advantage of trading using opposite First Capital and First CommunityPFD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, First CommunityPFD 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 First CommunityPFD will offset losses from the drop in First CommunityPFD'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 |
| First CommunityPFD vs. KeyCorp | First CommunityPFD vs. Maplebear Common Stock | First CommunityPFD vs. Webster Financial | First CommunityPFD vs. Aquagold International |
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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