Correlation Between First Financial and Delhi Bank
Can any of the company-specific risk be diversified away by investing in both First Financial and Delhi Bank 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 Financial and Delhi Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Financial Bancorp and Delhi Bank Corp, you can compare the effects of market volatilities on First Financial and Delhi Bank 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 Financial with a short position of Delhi Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and Delhi Bank.
Diversification Opportunities for First Financial and Delhi Bank
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Delhi is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Bancorp and Delhi Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delhi Bank Corp and First 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 First Financial Bancorp are associated (or correlated) with Delhi Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delhi Bank Corp has no effect on the direction of First Financial i.e., First Financial and Delhi Bank go up and down completely randomly.
Pair Corralation between First Financial and Delhi Bank
Given the investment horizon of 90 days First Financial Bancorp is expected to generate 10.21 times more return on investment than Delhi Bank. However, First Financial is 10.21 times more volatile than Delhi Bank Corp. It trades about 0.1 of its potential returns per unit of risk. Delhi Bank Corp is currently generating about 0.03 per unit of risk. If you would invest 2,634 in First Financial Bancorp on August 28, 2024 and sell it today you would earn a total of 400.00 from holding First Financial Bancorp or generate 15.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.88% |
| Values | Daily Returns |
First Financial Bancorp vs. Delhi Bank Corp
Performance |
| Timeline |
| First Financial Bancorp |
| Delhi Bank Corp |
First Financial and Delhi Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and Delhi Bank
The main advantage of trading using opposite First Financial and Delhi Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, Delhi Bank 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 Delhi Bank will offset losses from the drop in Delhi Bank's long position.| First Financial vs. Fifth Third Bancorp | First Financial vs. Huntington Bancshares Incorporated | First Financial vs. MT Bank |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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