Correlation Between FormFactor and First Community
Can any of the company-specific risk be diversified away by investing in both FormFactor and First Community 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 FormFactor and First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FormFactor and First Community Bancshares, you can compare the effects of market volatilities on FormFactor and First Community 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 FormFactor with a short position of First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of FormFactor and First Community.
Diversification Opportunities for FormFactor and First Community
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FormFactor and First is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding FormFactor and First Community Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community Banc and FormFactor 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 FormFactor are associated (or correlated) with First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community Banc has no effect on the direction of FormFactor i.e., FormFactor and First Community go up and down completely randomly.
Pair Corralation between FormFactor and First Community
Given the investment horizon of 90 days FormFactor is expected to generate 2.85 times more return on investment than First Community. However, FormFactor is 2.85 times more volatile than First Community Bancshares. It trades about 0.02 of its potential returns per unit of risk. First Community Bancshares is currently generating about -0.28 per unit of risk. If you would invest 4,196 in FormFactor on September 12, 2024 and sell it today you would earn a total of 4.00 from holding FormFactor or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
FormFactor vs. First Community Bancshares
Performance |
| Timeline |
| FormFactor |
| First Community Banc |
FormFactor and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FormFactor and First Community
The main advantage of trading using opposite FormFactor and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FormFactor position performs unexpectedly, First Community 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 First Community will offset losses from the drop in First Community's long position.| FormFactor vs. Silicon Laboratories | FormFactor vs. Diodes Incorporated | FormFactor vs. MACOM Technology Solutions | FormFactor vs. Amkor Technology |
| First Community vs. Western Acquisition Ventures | First Community vs. RCI Hospitality Holdings | First Community vs. The Cheesecake Factory | First Community vs. Kite Realty Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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