Correlation Between First Capital and First Of
Can any of the company-specific risk be diversified away by investing in both First Capital and First Of 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 Of 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 of Long, you can compare the effects of market volatilities on First Capital and First Of 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 Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and First Of.
Diversification Opportunities for First Capital and First Of
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and First is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and First of Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First of Long 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 Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First of Long has no effect on the direction of First Capital i.e., First Capital and First Of go up and down completely randomly.
Pair Corralation between First Capital and First Of
Given the investment horizon of 90 days First Capital is expected to under-perform the First Of. But the stock apears to be less risky and, when comparing its historical volatility, First Capital is 1.96 times less risky than First Of. The stock trades about -0.34 of its potential returns per unit of risk. The First of Long is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,269 in First of Long on August 30, 2024 and sell it today you would earn a total of 195.00 from holding First of Long or generate 15.37% 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. First of Long
Performance |
| Timeline |
| First Capital |
| First of Long |
First Capital and First Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and First Of
The main advantage of trading using opposite First Capital and First Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, First Of 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 Of will offset losses from the drop in First Of'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 Of vs. SVB T Corp | First Of vs. First Capital | First Of vs. Pioneer Bankcorp | First Of vs. Liberty Northwest 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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