Correlation Between First Horizon and FVCBankcorp
Can any of the company-specific risk be diversified away by investing in both First Horizon and FVCBankcorp 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 Horizon and FVCBankcorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Horizon National and FVCBankcorp, you can compare the effects of market volatilities on First Horizon and FVCBankcorp 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 Horizon with a short position of FVCBankcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Horizon and FVCBankcorp.
Diversification Opportunities for First Horizon and FVCBankcorp
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and FVCBankcorp is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon National and FVCBankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FVCBankcorp and First Horizon 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 Horizon National are associated (or correlated) with FVCBankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FVCBankcorp has no effect on the direction of First Horizon i.e., First Horizon and FVCBankcorp go up and down completely randomly.
Pair Corralation between First Horizon and FVCBankcorp
Considering the 90-day investment horizon First Horizon National is expected to generate 0.81 times more return on investment than FVCBankcorp. However, First Horizon National is 1.23 times less risky than FVCBankcorp. It trades about 0.12 of its potential returns per unit of risk. FVCBankcorp is currently generating about 0.08 per unit of risk. If you would invest 1,506 in First Horizon National on September 2, 2024 and sell it today you would earn a total of 607.00 from holding First Horizon National or generate 40.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Horizon National vs. FVCBankcorp
Performance |
| Timeline |
| First Horizon National |
| FVCBankcorp |
First Horizon and FVCBankcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Horizon and FVCBankcorp
The main advantage of trading using opposite First Horizon and FVCBankcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Horizon position performs unexpectedly, FVCBankcorp 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 FVCBankcorp will offset losses from the drop in FVCBankcorp's long position.| First Horizon vs. Zions Bancorporation | First Horizon vs. KeyCorp | First Horizon vs. Comerica | First Horizon vs. Western Alliance Bancorporation |
| FVCBankcorp vs. Affinity Bancshares | FVCBankcorp vs. Auburn National Bancorporation | FVCBankcorp vs. First Community | FVCBankcorp vs. LINKBANCORP |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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