Correlation Between Fentura Financial and First National
Can any of the company-specific risk be diversified away by investing in both Fentura Financial and First National 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 Fentura Financial and First National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fentura Financial and First National Bank, you can compare the effects of market volatilities on Fentura Financial and First National 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 Fentura Financial with a short position of First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fentura Financial and First National.
Diversification Opportunities for Fentura Financial and First National
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fentura and First is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fentura Financial and First National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Bank and Fentura Financial 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 Fentura Financial are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Bank has no effect on the direction of Fentura Financial i.e., Fentura Financial and First National go up and down completely randomly.
Pair Corralation between Fentura Financial and First National
Given the investment horizon of 90 days Fentura Financial is expected to under-perform the First National. But the otc stock apears to be less risky and, when comparing its historical volatility, Fentura Financial is 1.29 times less risky than First National. The otc stock trades about -0.05 of its potential returns per unit of risk. The First National Bank is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 21,526 in First National Bank on January 10, 2025 and sell it today you would earn a total of 1,874 from holding First National Bank or generate 8.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 72.82% |
| Values | Daily Returns |
Fentura Financial vs. First National Bank
Performance |
| Timeline |
| Fentura Financial |
Risk-Adjusted Performance
Insignificant
Weak | Strong |
| First National Bank |
Fentura Financial and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fentura Financial and First National
The main advantage of trading using opposite Fentura Financial and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fentura Financial position performs unexpectedly, First National 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 National will offset losses from the drop in First National's long position.| Fentura Financial vs. Delhi Bank Corp | Fentura Financial vs. Bank of Utica | Fentura Financial vs. First Community | Fentura Financial vs. National Capital Bank |
| First National vs. IF Bancorp | First National vs. LINKBANCORP | First National vs. Pathfinder Bancorp | First National vs. First Keystone Corp |
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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