Correlation Between First Community and Blackhawk Bancorp
Can any of the company-specific risk be diversified away by investing in both First Community and Blackhawk Bancorp 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 Blackhawk Bancorp 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 Blackhawk Bancorp, you can compare the effects of market volatilities on First Community and Blackhawk Bancorp 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 Blackhawk Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Blackhawk Bancorp.
Diversification Opportunities for First Community and Blackhawk Bancorp
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Blackhawk is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding First Community Financial and Blackhawk Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackhawk 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 Blackhawk Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackhawk Bancorp has no effect on the direction of First Community i.e., First Community and Blackhawk Bancorp go up and down completely randomly.
Pair Corralation between First Community and Blackhawk Bancorp
Given the investment horizon of 90 days First Community Financial is expected to under-perform the Blackhawk Bancorp. In addition to that, First Community is 1.28 times more volatile than Blackhawk Bancorp. It trades about -0.06 of its total potential returns per unit of risk. Blackhawk Bancorp is currently generating about 0.09 per unit of volatility. If you would invest 2,840 in Blackhawk Bancorp on August 26, 2024 and sell it today you would earn a total of 510.00 from holding Blackhawk Bancorp or generate 17.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.99% |
| Values | Daily Returns |
First Community Financial vs. Blackhawk Bancorp
Performance |
| Timeline |
| First Community Financial |
| Blackhawk Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Community and Blackhawk Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and Blackhawk Bancorp
The main advantage of trading using opposite First Community and Blackhawk Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community position performs unexpectedly, Blackhawk Bancorp 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 Blackhawk Bancorp will offset losses from the drop in Blackhawk Bancorp's long position.| First Community vs. CCSB Financial Corp | First Community vs. Bank of Utica | First Community vs. BEO Bancorp | First Community vs. First Community |
| Blackhawk Bancorp vs. CCSB Financial Corp | Blackhawk Bancorp vs. Bank of Utica | Blackhawk Bancorp vs. First Community Financial | Blackhawk Bancorp vs. BEO Bancorp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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