Correlation Between First Sound and Peak Bancorp
Can any of the company-specific risk be diversified away by investing in both First Sound and Peak Bancorp 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 Sound and Peak Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Sound Bank and Peak Bancorp, you can compare the effects of market volatilities on First Sound and Peak Bancorp 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 Sound with a short position of Peak Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Sound and Peak Bancorp.
Diversification Opportunities for First Sound and Peak Bancorp
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Peak is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding First Sound Bank and Peak Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peak Bancorp and First Sound 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 Sound Bank are associated (or correlated) with Peak Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peak Bancorp has no effect on the direction of First Sound i.e., First Sound and Peak Bancorp go up and down completely randomly.
Pair Corralation between First Sound and Peak Bancorp
Given the investment horizon of 90 days First Sound Bank is expected to generate 1.89 times more return on investment than Peak Bancorp. However, First Sound is 1.89 times more volatile than Peak Bancorp. It trades about 0.08 of its potential returns per unit of risk. Peak Bancorp is currently generating about -0.15 per unit of risk. If you would invest 390.00 in First Sound Bank on September 2, 2024 and sell it today you would earn a total of 280.00 from holding First Sound Bank or generate 71.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 15.15% |
| Values | Daily Returns |
First Sound Bank vs. Peak Bancorp
Performance |
| Timeline |
| First Sound Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Peak Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Sound and Peak Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Sound and Peak Bancorp
The main advantage of trading using opposite First Sound and Peak Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Sound position performs unexpectedly, Peak Bancorp 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 Peak Bancorp will offset losses from the drop in Peak Bancorp's long position.| First Sound vs. Rhinebeck Bancorp | First Sound vs. Magyar Bancorp | First Sound vs. Community West Bancshares | First Sound vs. First Financial Northwest |
| Peak Bancorp vs. MVB Financial Corp | Peak Bancorp vs. Finward Bancorp | Peak Bancorp vs. First Community | Peak Bancorp vs. LINKBANCORP |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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