Correlation Between First Community and Truxton
Can any of the company-specific risk be diversified away by investing in both First Community and Truxton 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 Truxton 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 Truxton, you can compare the effects of market volatilities on First Community and Truxton 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 Truxton. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Truxton.
Diversification Opportunities for First Community and Truxton
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Truxton is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Community Financial and Truxton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truxton 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 Truxton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truxton has no effect on the direction of First Community i.e., First Community and Truxton go up and down completely randomly.
Pair Corralation between First Community and Truxton
Given the investment horizon of 90 days First Community Financial is expected to under-perform the Truxton. In addition to that, First Community is 3.66 times more volatile than Truxton. It trades about -0.15 of its total potential returns per unit of risk. Truxton is currently generating about 0.2 per unit of volatility. If you would invest 7,118 in Truxton on August 30, 2024 and sell it today you would earn a total of 237.00 from holding Truxton or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Community Financial vs. Truxton
Performance |
| Timeline |
| First Community Financial |
| Truxton |
First Community and Truxton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and Truxton
The main advantage of trading using opposite First Community and Truxton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community position performs unexpectedly, Truxton 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 Truxton will offset losses from the drop in Truxton'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 |
| Truxton vs. Israel Discount Bank | Truxton vs. Baraboo Bancorporation | Truxton vs. Danske Bank AS | Truxton vs. Jyske Bank AS |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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