Correlation Between First Financial and Triumph Financial
Can any of the company-specific risk be diversified away by investing in both First Financial and Triumph 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 Financial and Triumph Financial 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 Triumph Financial, you can compare the effects of market volatilities on First Financial and Triumph 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 Financial with a short position of Triumph Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and Triumph Financial.
Diversification Opportunities for First Financial and Triumph Financial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Triumph is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Bancorp and Triumph Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triumph Financial 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 Triumph Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triumph Financial has no effect on the direction of First Financial i.e., First Financial and Triumph Financial go up and down completely randomly.
Pair Corralation between First Financial and Triumph Financial
Given the investment horizon of 90 days First Financial Bancorp is expected to generate 0.38 times more return on investment than Triumph Financial. However, First Financial Bancorp is 2.6 times less risky than Triumph Financial. It trades about 0.2 of its potential returns per unit of risk. Triumph Financial is currently generating about -0.16 per unit of risk. If you would invest 2,646 in First Financial Bancorp on November 3, 2024 and sell it today you would earn a total of 156.00 from holding First Financial Bancorp or generate 5.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Financial Bancorp vs. Triumph Financial
Performance |
| Timeline |
| First Financial Bancorp |
| Triumph Financial |
First Financial and Triumph Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and Triumph Financial
The main advantage of trading using opposite First Financial and Triumph Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, Triumph 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 Triumph Financial will offset losses from the drop in Triumph Financial's long position.| First Financial vs. Home Bancorp | First Financial vs. Heritage Financial | First Financial vs. First Northwest Bancorp | First Financial vs. HomeTrust Bancshares |
| Triumph Financial vs. First Capital | Triumph Financial vs. Finward Bancorp | Triumph Financial vs. Community West Bancshares | Triumph Financial vs. QCR Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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