Correlation Between First Commonwealth and OFG Bancorp
Can any of the company-specific risk be diversified away by investing in both First Commonwealth and OFG 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 Commonwealth and OFG Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Commonwealth Financial and OFG Bancorp, you can compare the effects of market volatilities on First Commonwealth and OFG 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 Commonwealth with a short position of OFG Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Commonwealth and OFG Bancorp.
Diversification Opportunities for First Commonwealth and OFG Bancorp
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and OFG is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding First Commonwealth Financial and OFG Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFG Bancorp and First Commonwealth 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 Commonwealth Financial are associated (or correlated) with OFG Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFG Bancorp has no effect on the direction of First Commonwealth i.e., First Commonwealth and OFG Bancorp go up and down completely randomly.
Pair Corralation between First Commonwealth and OFG Bancorp
Considering the 90-day investment horizon First Commonwealth is expected to generate 1.2 times less return on investment than OFG Bancorp. In addition to that, First Commonwealth is 1.09 times more volatile than OFG Bancorp. It trades about 0.11 of its total potential returns per unit of risk. OFG Bancorp is currently generating about 0.15 per unit of volatility. If you would invest 4,175 in OFG Bancorp on November 8, 2024 and sell it today you would earn a total of 221.00 from holding OFG Bancorp or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Commonwealth Financial vs. OFG Bancorp
Performance |
| Timeline |
| First Commonwealth |
| OFG Bancorp |
First Commonwealth and OFG Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Commonwealth and OFG Bancorp
The main advantage of trading using opposite First Commonwealth and OFG Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Commonwealth position performs unexpectedly, OFG 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 OFG Bancorp will offset losses from the drop in OFG Bancorp's long position.| First Commonwealth vs. Great Southern Bancorp | First Commonwealth vs. Heritage Financial | First Commonwealth vs. Finward Bancorp | First Commonwealth vs. QCR Holdings |
| OFG Bancorp vs. Popular | OFG Bancorp vs. The First Bancshares, | OFG Bancorp vs. First Commonwealth Financial | OFG Bancorp vs. First 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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