Correlation Between First Capital and Community Financial
Can any of the company-specific risk be diversified away by investing in both First Capital and Community Financial 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 Community Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Capital and Community Financial Corp, you can compare the effects of market volatilities on First Capital and Community Financial 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 Community Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and Community Financial.
Diversification Opportunities for First Capital and Community Financial
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Community is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and Community Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Financial Corp 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 Community Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Financial Corp has no effect on the direction of First Capital i.e., First Capital and Community Financial go up and down completely randomly.
Pair Corralation between First Capital and Community Financial
If you would invest 2,709 in Community Financial Corp on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Community Financial Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
First Capital vs. Community Financial Corp
Performance |
| Timeline |
| First Capital |
| Community Financial Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Capital and Community Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and Community Financial
The main advantage of trading using opposite First Capital and Community Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, Community Financial 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 Community Financial will offset losses from the drop in Community Financial's long position.| First Capital vs. KeyCorp | First Capital vs. Comerica | First Capital vs. First Horizon National | First Capital vs. Western Alliance Bancorporation |
| Community Financial vs. Southern Missouri Bancorp | Community Financial vs. Western New England | Community Financial vs. First Community | Community Financial vs. SB Financial Group |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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