Correlation Between First Capital and National Bank
Can any of the company-specific risk be diversified away by investing in both First Capital and National Bank 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 National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Capital and National Bank Holdings, you can compare the effects of market volatilities on First Capital and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and National Bank.
Diversification Opportunities for First Capital and National Bank
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of First Capital i.e., First Capital and National Bank go up and down completely randomly.
Pair Corralation between First Capital and National Bank
Given the investment horizon of 90 days First Capital is expected to generate 2.68 times less return on investment than National Bank. In addition to that, First Capital is 1.06 times more volatile than National Bank Holdings. It trades about 0.03 of its total potential returns per unit of risk. National Bank Holdings is currently generating about 0.1 per unit of volatility. If you would invest 4,321 in National Bank Holdings on August 28, 2024 and sell it today you would earn a total of 618.00 from holding National Bank Holdings or generate 14.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Capital vs. National Bank Holdings
Performance |
| Timeline |
| First Capital |
| National Bank Holdings |
First Capital and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and National Bank
The main advantage of trading using opposite First Capital and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| First Capital vs. Fifth Third Bancorp | First Capital vs. Zions Bancorporation | First Capital vs. Huntington Bancshares Incorporated | First Capital vs. Comerica |
| National Bank vs. Fifth Third Bancorp | National Bank vs. Zions Bancorporation | National Bank vs. Huntington Bancshares Incorporated | National Bank vs. Comerica |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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