Correlation Between First Capital and First Foundation
Can any of the company-specific risk be diversified away by investing in both First Capital and First Foundation 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 Foundation 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 Foundation, you can compare the effects of market volatilities on First Capital and First Foundation 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 Foundation. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and First Foundation.
Diversification Opportunities for First Capital and First Foundation
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and First is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and First Foundation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Foundation 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 Foundation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Foundation has no effect on the direction of First Capital i.e., First Capital and First Foundation go up and down completely randomly.
Pair Corralation between First Capital and First Foundation
Given the investment horizon of 90 days First Capital is expected to generate 0.53 times more return on investment than First Foundation. However, First Capital is 1.87 times less risky than First Foundation. It trades about 0.05 of its potential returns per unit of risk. First Foundation is currently generating about 0.0 per unit of risk. If you would invest 2,728 in First Capital on September 3, 2024 and sell it today you would earn a total of 584.00 from holding First Capital or generate 21.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.37% |
| Values | Daily Returns |
First Capital vs. First Foundation
Performance |
| Timeline |
| First Capital |
| First Foundation |
First Capital and First Foundation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and First Foundation
The main advantage of trading using opposite First Capital and First Foundation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, First Foundation 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 Foundation will offset losses from the drop in First Foundation's long position.| First Capital vs. JPMorgan Chase Co | First Capital vs. Citigroup | First Capital vs. Wells Fargo | First Capital vs. Toronto Dominion Bank |
| First Foundation vs. Veritex Holdings | First Foundation vs. ConnectOne Bancorp | First Foundation vs. The First Bancshares, | First Foundation vs. First Mid Illinois |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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