Correlation Between First Community and Bank of Utica
Can any of the company-specific risk be diversified away by investing in both First Community and Bank of Utica 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 Bank of Utica 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 Bank of Utica, you can compare the effects of market volatilities on First Community and Bank of Utica 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 Bank of Utica. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Bank of Utica.
Diversification Opportunities for First Community and Bank of Utica
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Bank is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding First Community Financial and Bank of Utica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Utica 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 Bank of Utica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Utica has no effect on the direction of First Community i.e., First Community and Bank of Utica go up and down completely randomly.
Pair Corralation between First Community and Bank of Utica
Given the investment horizon of 90 days First Community Financial is expected to under-perform the Bank of Utica. In addition to that, First Community is 2.59 times more volatile than Bank of Utica. It trades about -0.15 of its total potential returns per unit of risk. Bank of Utica is currently generating about 0.34 per unit of volatility. If you would invest 45,000 in Bank of Utica on August 29, 2024 and sell it today you would earn a total of 3,800 from holding Bank of Utica or generate 8.44% 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. Bank of Utica
Performance |
| Timeline |
| First Community Financial |
| Bank of Utica |
First Community and Bank of Utica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and Bank of Utica
The main advantage of trading using opposite First Community and Bank of Utica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community position performs unexpectedly, Bank of Utica 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 Bank of Utica will offset losses from the drop in Bank of Utica'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 |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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