Correlation Between First Community and RBB Bancorp
Can any of the company-specific risk be diversified away by investing in both First Community and RBB Bancorp 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 RBB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Community and RBB Bancorp, you can compare the effects of market volatilities on First Community and RBB Bancorp 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 RBB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and RBB Bancorp.
Diversification Opportunities for First Community and RBB Bancorp
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and RBB is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding First Community and RBB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBB 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 RBB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBB Bancorp has no effect on the direction of First Community i.e., First Community and RBB Bancorp go up and down completely randomly.
Pair Corralation between First Community and RBB Bancorp
Given the investment horizon of 90 days First Community is expected to generate 1.05 times less return on investment than RBB Bancorp. In addition to that, First Community is 1.13 times more volatile than RBB Bancorp. It trades about 0.07 of its total potential returns per unit of risk. RBB Bancorp is currently generating about 0.09 per unit of volatility. If you would invest 1,652 in RBB Bancorp on September 3, 2024 and sell it today you would earn a total of 739.00 from holding RBB Bancorp or generate 44.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Community vs. RBB Bancorp
Performance |
| Timeline |
| First Community |
| RBB Bancorp |
First Community and RBB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and RBB Bancorp
The main advantage of trading using opposite First Community and RBB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community position performs unexpectedly, RBB Bancorp 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 RBB Bancorp will offset losses from the drop in RBB Bancorp's long position.| First Community vs. JPMorgan Chase Co | First Community vs. Citigroup | First Community vs. Wells Fargo | First Community vs. Toronto Dominion Bank |
| RBB Bancorp vs. OP Bancorp | RBB Bancorp vs. Hanmi Financial | RBB Bancorp vs. Hope Bancorp | RBB Bancorp vs. Northeast Bancorp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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