Correlation Between First IC and Main Street
Can any of the company-specific risk be diversified away by investing in both First IC and Main Street 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 IC and Main Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First IC and Main Street Financial, you can compare the effects of market volatilities on First IC and Main Street 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 IC with a short position of Main Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of First IC and Main Street.
Diversification Opportunities for First IC and Main Street
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Main is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding First IC and Main Street Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Street Financial and First IC 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 IC are associated (or correlated) with Main Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Street Financial has no effect on the direction of First IC i.e., First IC and Main Street go up and down completely randomly.
Pair Corralation between First IC and Main Street
Given the investment horizon of 90 days First IC is expected to generate 2.71 times more return on investment than Main Street. However, First IC is 2.71 times more volatile than Main Street Financial. It trades about 0.05 of its potential returns per unit of risk. Main Street Financial is currently generating about 0.0 per unit of risk. If you would invest 603.00 in First IC on August 29, 2024 and sell it today you would earn a total of 287.00 from holding First IC or generate 47.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 63.51% |
| Values | Daily Returns |
First IC vs. Main Street Financial
Performance |
| Timeline |
| First IC |
| Main Street Financial |
First IC and Main Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First IC and Main Street
The main advantage of trading using opposite First IC and Main Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First IC position performs unexpectedly, Main Street 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 Main Street will offset losses from the drop in Main Street's long position.| First IC vs. CCFNB Bancorp | First IC vs. Glen Burnie Bancorp | First IC vs. Main Street Financial | First IC vs. Enterprise Financial Services |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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