Correlation Between 1st Capital and American Business
Can any of the company-specific risk be diversified away by investing in both 1st Capital and American Business 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 1st Capital and American Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1st Capital Bank and American Business Bk, you can compare the effects of market volatilities on 1st Capital and American Business 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 1st Capital with a short position of American Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Capital and American Business.
Diversification Opportunities for 1st Capital and American Business
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 1st and American is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding 1st Capital Bank and American Business Bk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Business and 1st Capital 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 1st Capital Bank are associated (or correlated) with American Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Business has no effect on the direction of 1st Capital i.e., 1st Capital and American Business go up and down completely randomly.
Pair Corralation between 1st Capital and American Business
Given the investment horizon of 90 days 1st Capital Bank is expected to generate 1.31 times more return on investment than American Business. However, 1st Capital is 1.31 times more volatile than American Business Bk. It trades about 0.16 of its potential returns per unit of risk. American Business Bk is currently generating about 0.08 per unit of risk. If you would invest 690.00 in 1st Capital Bank on August 26, 2024 and sell it today you would earn a total of 710.00 from holding 1st Capital Bank or generate 102.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 65.15% |
| Values | Daily Returns |
1st Capital Bank vs. American Business Bk
Performance |
| Timeline |
| 1st Capital Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
| American Business |
1st Capital and American Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1st Capital and American Business
The main advantage of trading using opposite 1st Capital and American Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Capital position performs unexpectedly, American Business 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 American Business will offset losses from the drop in American Business' long position.| 1st Capital vs. Pacific Valley Bank | 1st Capital vs. Pinnacle Bank | 1st Capital vs. Santa Cruz County | 1st Capital vs. First Northern Community |
| American Business vs. Invesco High Income | American Business vs. Blackrock Muniholdings Ny | American Business vs. MFS Investment Grade | American Business vs. Federated Premier Municipal |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |