Correlation Between First Community and Lewis Clark
Can any of the company-specific risk be diversified away by investing in both First Community and Lewis Clark 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 Lewis Clark 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 Lewis Clark Bancorp, you can compare the effects of market volatilities on First Community and Lewis Clark 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 Lewis Clark. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Lewis Clark.
Diversification Opportunities for First Community and Lewis Clark
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Lewis is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding First Community Financial and Lewis Clark Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lewis Clark 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 Lewis Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lewis Clark Bancorp has no effect on the direction of First Community i.e., First Community and Lewis Clark go up and down completely randomly.
Pair Corralation between First Community and Lewis Clark
Given the investment horizon of 90 days First Community Financial is expected to under-perform the Lewis Clark. But the pink sheet apears to be less risky and, when comparing its historical volatility, First Community Financial is 1.54 times less risky than Lewis Clark. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Lewis Clark Bancorp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,505 in Lewis Clark Bancorp on August 24, 2024 and sell it today you would lose (505.00) from holding Lewis Clark Bancorp or give up 14.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 76.61% |
| Values | Daily Returns |
First Community Financial vs. Lewis Clark Bancorp
Performance |
| Timeline |
| First Community Financial |
| Lewis Clark Bancorp |
First Community and Lewis Clark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and Lewis Clark
The main advantage of trading using opposite First Community and Lewis Clark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community position performs unexpectedly, Lewis Clark 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 Lewis Clark will offset losses from the drop in Lewis Clark'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 |
| Lewis Clark vs. Nedbank Group | Lewis Clark vs. Standard Bank Group | Lewis Clark vs. Bank Central Asia | Lewis Clark 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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