Correlation Between First Community and Civista Bancshares
Can any of the company-specific risk be diversified away by investing in both First Community and Civista Bancshares 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 Civista Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Community and Civista Bancshares, you can compare the effects of market volatilities on First Community and Civista Bancshares 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 Civista Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Civista Bancshares.
Diversification Opportunities for First Community and Civista Bancshares
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Civista is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding First Community and Civista Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civista Bancshares 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 are associated (or correlated) with Civista Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civista Bancshares has no effect on the direction of First Community i.e., First Community and Civista Bancshares go up and down completely randomly.
Pair Corralation between First Community and Civista Bancshares
Given the investment horizon of 90 days First Community is expected to generate 1.01 times less return on investment than Civista Bancshares. In addition to that, First Community is 1.06 times more volatile than Civista Bancshares. It trades about 0.11 of its total potential returns per unit of risk. Civista Bancshares is currently generating about 0.12 per unit of volatility. If you would invest 1,458 in Civista Bancshares on August 27, 2024 and sell it today you would earn a total of 832.00 from holding Civista Bancshares or generate 57.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
First Community vs. Civista Bancshares
Performance |
Timeline |
First Community |
Civista Bancshares |
First Community and Civista Bancshares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Community and Civista Bancshares
The main advantage of trading using opposite First Community and Civista Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community position performs unexpectedly, Civista Bancshares 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 Civista Bancshares will offset losses from the drop in Civista Bancshares' long position.First Community vs. Community West Bancshares | First Community vs. First Financial Northwest | First Community vs. First Northwest Bancorp | First Community vs. Home Federal Bancorp |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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