Correlation Between First CommunityPFD and Fentura Financial
Can any of the company-specific risk be diversified away by investing in both First CommunityPFD and Fentura 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 CommunityPFD and Fentura Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Community and Fentura Financial, you can compare the effects of market volatilities on First CommunityPFD and Fentura 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 CommunityPFD with a short position of Fentura Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First CommunityPFD and Fentura Financial.
Diversification Opportunities for First CommunityPFD and Fentura Financial
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Fentura is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding First Community and Fentura Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fentura Financial and First CommunityPFD 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 Fentura Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fentura Financial has no effect on the direction of First CommunityPFD i.e., First CommunityPFD and Fentura Financial go up and down completely randomly.
Pair Corralation between First CommunityPFD and Fentura Financial
Assuming the 90 days horizon First Community is expected to generate 0.27 times more return on investment than Fentura Financial. However, First Community is 3.75 times less risky than Fentura Financial. It trades about -0.24 of its potential returns per unit of risk. Fentura Financial is currently generating about -0.1 per unit of risk. If you would invest 940.00 in First Community on October 25, 2024 and sell it today you would lose (15.00) from holding First Community or give up 1.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Community vs. Fentura Financial
Performance |
| Timeline |
| First CommunityPFD |
| Fentura Financial |
First CommunityPFD and Fentura Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First CommunityPFD and Fentura Financial
The main advantage of trading using opposite First CommunityPFD and Fentura Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First CommunityPFD position performs unexpectedly, Fentura 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 Fentura Financial will offset losses from the drop in Fentura Financial's long position.| First CommunityPFD vs. Precision Optics, | First CommunityPFD vs. RBC Bearings Incorporated | First CommunityPFD vs. Franklin Wireless Corp | First CommunityPFD vs. Envista Holdings Corp |
| Fentura Financial vs. Pioneer Bankcorp | Fentura Financial vs. Liberty Northwest Bancorp | Fentura Financial vs. First Community | Fentura Financial vs. Coeur dAlene 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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