Correlation Between Freedom Bank and First Bankers
Can any of the company-specific risk be diversified away by investing in both Freedom Bank and First Bankers 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 Freedom Bank and First Bankers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Bank of and First Bankers Trustshares, you can compare the effects of market volatilities on Freedom Bank and First Bankers 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 Freedom Bank with a short position of First Bankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and First Bankers.
Diversification Opportunities for Freedom Bank and First Bankers
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Freedom and First is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and First Bankers Trustshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bankers Trustshares and Freedom Bank 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 Freedom Bank of are associated (or correlated) with First Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bankers Trustshares has no effect on the direction of Freedom Bank i.e., Freedom Bank and First Bankers go up and down completely randomly.
Pair Corralation between Freedom Bank and First Bankers
Given the investment horizon of 90 days Freedom Bank of is expected to generate 2.62 times more return on investment than First Bankers. However, Freedom Bank is 2.62 times more volatile than First Bankers Trustshares. It trades about -0.03 of its potential returns per unit of risk. First Bankers Trustshares is currently generating about -0.27 per unit of risk. If you would invest 1,032 in Freedom Bank of on November 2, 2024 and sell it today you would lose (7.00) from holding Freedom Bank of or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Bank of vs. First Bankers Trustshares
Performance |
| Timeline |
| Freedom Bank |
| First Bankers Trustshares |
Freedom Bank and First Bankers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and First Bankers
The main advantage of trading using opposite Freedom Bank and First Bankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank position performs unexpectedly, First Bankers 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 First Bankers will offset losses from the drop in First Bankers' long position.| Freedom Bank vs. National Capital Bank | Freedom Bank vs. Community Heritage Financial | Freedom Bank vs. Citizens Financial Corp | Freedom Bank vs. Bank of Idaho |
| First Bankers vs. Greenville Federal Financial | First Bankers vs. First Ottawa Bancshares | First Bankers vs. Coastal Carolina Bancshares | First Bankers vs. Citizens Bancorp Investment |
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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