Correlation Between First Community and Dana
Can any of the company-specific risk be diversified away by investing in both First Community and Dana 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 Community and Dana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Community Bancshares and Dana Inc, you can compare the effects of market volatilities on First Community and Dana 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 Community with a short position of Dana. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Dana.
Diversification Opportunities for First Community and Dana
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Dana is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding First Community Bancshares and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc and First Community 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 Community Bancshares are associated (or correlated) with Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of First Community i.e., First Community and Dana go up and down completely randomly.
Pair Corralation between First Community and Dana
Given the investment horizon of 90 days First Community is expected to generate 2.25 times less return on investment than Dana. In addition to that, First Community is 1.18 times more volatile than Dana Inc. It trades about 0.16 of its total potential returns per unit of risk. Dana Inc is currently generating about 0.42 per unit of volatility. If you would invest 758.00 in Dana Inc on September 1, 2024 and sell it today you would earn a total of 242.00 from holding Dana Inc or generate 31.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Community Bancshares vs. Dana Inc
Performance |
| Timeline |
| First Community Banc |
| Dana Inc |
First Community and Dana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and Dana
The main advantage of trading using opposite First Community and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community position performs unexpectedly, Dana 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 Dana will offset losses from the drop in Dana's long position.| First Community vs. Emerson Radio | First Community vs. Xponential Fitness | First Community vs. Harmony Gold Mining | First Community vs. Getty Copper |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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