Correlation Between First Bancorp and Triumph Financial
Can any of the company-specific risk be diversified away by investing in both First Bancorp and Triumph Financial 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 Bancorp and Triumph Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Bancorp and Triumph Financial, you can compare the effects of market volatilities on First Bancorp and Triumph Financial 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 Bancorp with a short position of Triumph Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancorp and Triumph Financial.
Diversification Opportunities for First Bancorp and Triumph Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Triumph is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding First Bancorp and Triumph Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triumph Financial and First Bancorp 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 Bancorp are associated (or correlated) with Triumph Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triumph Financial has no effect on the direction of First Bancorp i.e., First Bancorp and Triumph Financial go up and down completely randomly.
Pair Corralation between First Bancorp and Triumph Financial
Given the investment horizon of 90 days First Bancorp is expected to generate 1.74 times less return on investment than Triumph Financial. But when comparing it to its historical volatility, First Bancorp is 1.06 times less risky than Triumph Financial. It trades about 0.04 of its potential returns per unit of risk. Triumph Financial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,052 in Triumph Financial on September 14, 2024 and sell it today you would earn a total of 2,812 from holding Triumph Financial or generate 39.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Bancorp vs. Triumph Financial
Performance |
| Timeline |
| First Bancorp |
| Triumph Financial |
First Bancorp and Triumph Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bancorp and Triumph Financial
The main advantage of trading using opposite First Bancorp and Triumph Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancorp position performs unexpectedly, Triumph Financial 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 Triumph Financial will offset losses from the drop in Triumph Financial's long position.| First Bancorp vs. LINKBANCORP | First Bancorp vs. Bankwell Financial Group | First Bancorp vs. FS Bancorp | First Bancorp vs. Finward Bancorp |
| Triumph Financial vs. First Capital | Triumph Financial vs. Finward Bancorp | Triumph Financial vs. Community West Bancshares | Triumph Financial vs. QCR 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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