Correlation Between First Community and Berkshire Hills
Can any of the company-specific risk be diversified away by investing in both First Community and Berkshire Hills 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 Community and Berkshire Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Community Financial and Berkshire Hills Bancorp, you can compare the effects of market volatilities on First Community and Berkshire Hills 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 Community with a short position of Berkshire Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Berkshire Hills.
Diversification Opportunities for First Community and Berkshire Hills
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Berkshire is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding First Community Financial and Berkshire Hills Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hills Bancorp and First Community 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 Community Financial are associated (or correlated) with Berkshire Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hills Bancorp has no effect on the direction of First Community i.e., First Community and Berkshire Hills go up and down completely randomly.
Pair Corralation between First Community and Berkshire Hills
Given the investment horizon of 90 days First Community Financial is expected to under-perform the Berkshire Hills. But the pink sheet apears to be less risky and, when comparing its historical volatility, First Community Financial is 1.16 times less risky than Berkshire Hills. The pink sheet trades about -0.15 of its potential returns per unit of risk. The Berkshire Hills Bancorp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,731 in Berkshire Hills Bancorp on August 30, 2024 and sell it today you would earn a total of 359.00 from holding Berkshire Hills Bancorp or generate 13.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Community Financial vs. Berkshire Hills Bancorp
Performance |
| Timeline |
| First Community Financial |
| Berkshire Hills Bancorp |
First Community and Berkshire Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and Berkshire Hills
The main advantage of trading using opposite First Community and Berkshire Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community position performs unexpectedly, Berkshire Hills 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 Berkshire Hills will offset losses from the drop in Berkshire Hills' long position.| First Community vs. CCSB Financial Corp | First Community vs. Bank of Utica | First Community vs. BEO Bancorp | First Community vs. First Community |
| Berkshire Hills vs. Finward Bancorp | Berkshire Hills vs. Community West Bancshares | Berkshire Hills vs. First Community | Berkshire Hills vs. First Capital |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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