Correlation Between First Reliance and United Overseas
Can any of the company-specific risk be diversified away by investing in both First Reliance and United Overseas 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 Reliance and United Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Reliance Bancshares and United Overseas Bank, you can compare the effects of market volatilities on First Reliance and United Overseas 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 Reliance with a short position of United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Reliance and United Overseas.
Diversification Opportunities for First Reliance and United Overseas
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and United is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding First Reliance Bancshares and United Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Overseas Bank and First Reliance 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 Reliance Bancshares are associated (or correlated) with United Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Overseas Bank has no effect on the direction of First Reliance i.e., First Reliance and United Overseas go up and down completely randomly.
Pair Corralation between First Reliance and United Overseas
Given the investment horizon of 90 days First Reliance is expected to generate 2.1 times less return on investment than United Overseas. In addition to that, First Reliance is 1.83 times more volatile than United Overseas Bank. It trades about 0.02 of its total potential returns per unit of risk. United Overseas Bank is currently generating about 0.06 per unit of volatility. If you would invest 4,066 in United Overseas Bank on August 26, 2024 and sell it today you would earn a total of 1,339 from holding United Overseas Bank or generate 32.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Reliance Bancshares vs. United Overseas Bank
Performance |
| Timeline |
| First Reliance Bancshares |
| United Overseas Bank |
First Reliance and United Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Reliance and United Overseas
The main advantage of trading using opposite First Reliance and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Reliance position performs unexpectedly, United Overseas 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 United Overseas will offset losses from the drop in United Overseas' long position.| First Reliance vs. FNB Inc | First Reliance vs. Apollo Bancorp | First Reliance vs. Commercial National Financial | First Reliance vs. Community Bankers |
| United Overseas vs. KBC Groep NV | United Overseas vs. DBS Group Holdings | United Overseas vs. HomeStreet | United Overseas vs. Bank of Hawaii |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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