Correlation Between First Community and Summit Bank
Can any of the company-specific risk be diversified away by investing in both First Community and Summit Bank 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 Summit Bank 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 Summit Bank Group, you can compare the effects of market volatilities on First Community and Summit Bank 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 Summit Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Summit Bank.
Diversification Opportunities for First Community and Summit Bank
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Summit is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding First Community Financial and Summit Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Bank Group 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 Summit Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Bank Group has no effect on the direction of First Community i.e., First Community and Summit Bank go up and down completely randomly.
Pair Corralation between First Community and Summit Bank
Given the investment horizon of 90 days First Community Financial is expected to under-perform the Summit Bank. In addition to that, First Community is 2.13 times more volatile than Summit Bank Group. It trades about -0.24 of its total potential returns per unit of risk. Summit Bank Group is currently generating about -0.36 per unit of volatility. If you would invest 1,490 in Summit Bank Group on October 23, 2024 and sell it today you would lose (90.00) from holding Summit Bank Group or give up 6.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Community Financial vs. Summit Bank Group
Performance |
| Timeline |
| First Community Financial |
| Summit Bank Group |
First Community and Summit Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and Summit Bank
The main advantage of trading using opposite First Community and Summit Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community position performs unexpectedly, Summit Bank 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 Summit Bank will offset losses from the drop in Summit Bank'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 |
| Summit Bank vs. Century Next Financial | Summit Bank vs. Triad Business Bank | Summit Bank vs. First Ottawa Bancshares | Summit Bank vs. First Community Financial |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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