Correlation Between First Interstate and SCI Engineered
Can any of the company-specific risk be diversified away by investing in both First Interstate and SCI Engineered 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 Interstate and SCI Engineered into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Interstate BancSystem and SCI Engineered Materials, you can compare the effects of market volatilities on First Interstate and SCI Engineered 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 Interstate with a short position of SCI Engineered. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Interstate and SCI Engineered.
Diversification Opportunities for First Interstate and SCI Engineered
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and SCI is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding First Interstate BancSystem and SCI Engineered Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCI Engineered Materials and First Interstate 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 Interstate BancSystem are associated (or correlated) with SCI Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCI Engineered Materials has no effect on the direction of First Interstate i.e., First Interstate and SCI Engineered go up and down completely randomly.
Pair Corralation between First Interstate and SCI Engineered
Given the investment horizon of 90 days First Interstate BancSystem is expected to generate 1.58 times more return on investment than SCI Engineered. However, First Interstate is 1.58 times more volatile than SCI Engineered Materials. It trades about 0.22 of its potential returns per unit of risk. SCI Engineered Materials is currently generating about 0.15 per unit of risk. If you would invest 3,031 in First Interstate BancSystem on September 2, 2024 and sell it today you would earn a total of 466.00 from holding First Interstate BancSystem or generate 15.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Interstate BancSystem vs. SCI Engineered Materials
Performance |
| Timeline |
| First Interstate Ban |
| SCI Engineered Materials |
First Interstate and SCI Engineered Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Interstate and SCI Engineered
The main advantage of trading using opposite First Interstate and SCI Engineered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Interstate position performs unexpectedly, SCI Engineered 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 SCI Engineered will offset losses from the drop in SCI Engineered's long position.| First Interstate vs. Affinity Bancshares | First Interstate vs. Auburn National Bancorporation | First Interstate vs. BayCom Corp | First Interstate vs. Community West Bancshares |
| SCI Engineered vs. Ultra Clean Holdings | SCI Engineered vs. Amtech Systems | SCI Engineered vs. Veeco Instruments | SCI Engineered vs. Cohu Inc |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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