Correlation Between First Community and Merchants Marine
Can any of the company-specific risk be diversified away by investing in both First Community and Merchants Marine 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 Merchants Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Community and Merchants Marine Bancorp, you can compare the effects of market volatilities on First Community and Merchants Marine 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 Merchants Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Merchants Marine.
Diversification Opportunities for First Community and Merchants Marine
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Merchants is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding First Community and Merchants Marine Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants Marine Bancorp 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 Merchants Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Marine Bancorp has no effect on the direction of First Community i.e., First Community and Merchants Marine go up and down completely randomly.
Pair Corralation between First Community and Merchants Marine
Given the investment horizon of 90 days First Community is expected to generate 1.0 times more return on investment than Merchants Marine. However, First Community is 1.0 times less risky than Merchants Marine. It trades about 0.08 of its potential returns per unit of risk. Merchants Marine Bancorp is currently generating about 0.0 per unit of risk. If you would invest 1,714 in First Community on September 14, 2024 and sell it today you would earn a total of 881.00 from holding First Community or generate 51.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 63.2% |
| Values | Daily Returns |
First Community vs. Merchants Marine Bancorp
Performance |
| Timeline |
| First Community |
| Merchants Marine Bancorp |
First Community and Merchants Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and Merchants Marine
The main advantage of trading using opposite First Community and Merchants Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community position performs unexpectedly, Merchants Marine 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 Merchants Marine will offset losses from the drop in Merchants Marine's 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 |
| Merchants Marine vs. PT Bank Rakyat | Merchants Marine vs. Morningstar Unconstrained Allocation | Merchants Marine vs. Bondbloxx ETF Trust | Merchants Marine vs. Spring Valley Acquisition |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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