Correlation Between First Capital and Middlefield Banc
Can any of the company-specific risk be diversified away by investing in both First Capital and Middlefield Banc 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 Middlefield Banc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Capital and Middlefield Banc, you can compare the effects of market volatilities on First Capital and Middlefield Banc 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 Middlefield Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and Middlefield Banc.
Diversification Opportunities for First Capital and Middlefield Banc
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Middlefield is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and Middlefield Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlefield Banc 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 Middlefield Banc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middlefield Banc has no effect on the direction of First Capital i.e., First Capital and Middlefield Banc go up and down completely randomly.
Pair Corralation between First Capital and Middlefield Banc
Given the investment horizon of 90 days First Capital is expected to generate 0.81 times more return on investment than Middlefield Banc. However, First Capital is 1.23 times less risky than Middlefield Banc. It trades about 0.04 of its potential returns per unit of risk. Middlefield Banc is currently generating about 0.01 per unit of risk. If you would invest 2,492 in First Capital on November 27, 2024 and sell it today you would earn a total of 1,107 from holding First Capital or generate 44.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.37% |
| Values | Daily Returns |
First Capital vs. Middlefield Banc
Performance |
| Timeline |
| First Capital |
| Middlefield Banc |
First Capital and Middlefield Banc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and Middlefield Banc
The main advantage of trading using opposite First Capital and Middlefield Banc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, Middlefield Banc 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 Middlefield Banc will offset losses from the drop in Middlefield Banc'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 |
| Middlefield Banc vs. Home Federal Bancorp | Middlefield Banc vs. First Northwest Bancorp | Middlefield Banc vs. Lake Shore Bancorp | Middlefield Banc vs. Community West Bancshares |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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