Correlation Between First Community and Bank of Idaho Holding
Can any of the company-specific risk be diversified away by investing in both First Community and Bank of Idaho Holding 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 Idaho Holding 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 Idaho, you can compare the effects of market volatilities on First Community and Bank of Idaho Holding 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 Idaho Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Bank of Idaho Holding.
Diversification Opportunities for First Community and Bank of Idaho Holding
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Bank is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Community Financial and Bank of Idaho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Idaho Holding 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 Idaho Holding. 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 Idaho Holding has no effect on the direction of First Community i.e., First Community and Bank of Idaho Holding go up and down completely randomly.
Pair Corralation between First Community and Bank of Idaho Holding
Given the investment horizon of 90 days First Community Financial is expected to under-perform the Bank of Idaho Holding. In addition to that, First Community is 1.97 times more volatile than Bank of Idaho. It trades about -0.06 of its total potential returns per unit of risk. Bank of Idaho is currently generating about 0.04 per unit of volatility. If you would invest 2,910 in Bank of Idaho on August 24, 2024 and sell it today you would earn a total of 415.00 from holding Bank of Idaho or generate 14.26% 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 Idaho
Performance |
| Timeline |
| First Community Financial |
| Bank of Idaho Holding |
First Community and Bank of Idaho Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and Bank of Idaho Holding
The main advantage of trading using opposite First Community and Bank of Idaho Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community position performs unexpectedly, Bank of Idaho Holding 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 Idaho Holding will offset losses from the drop in Bank of Idaho Holding's long position.| First Community vs. Nedbank Group | First Community vs. Standard Bank Group | First Community vs. Bank Central Asia | First Community vs. PSB Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |