Correlation Between Fulton Financial and First Bancorp
Can any of the company-specific risk be diversified away by investing in both Fulton Financial and First 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 Fulton Financial and First Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fulton Financial and First Bancorp, you can compare the effects of market volatilities on Fulton Financial and First 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 Fulton Financial with a short position of First Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulton Financial and First Bancorp.
Diversification Opportunities for Fulton Financial and First Bancorp
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fulton and First is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Fulton Financial and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp and Fulton Financial 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 Fulton Financial are associated (or correlated) with First Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancorp has no effect on the direction of Fulton Financial i.e., Fulton Financial and First Bancorp go up and down completely randomly.
Pair Corralation between Fulton Financial and First Bancorp
Given the investment horizon of 90 days Fulton Financial is expected to generate 1.1 times more return on investment than First Bancorp. However, Fulton Financial is 1.1 times more volatile than First Bancorp. It trades about 0.11 of its potential returns per unit of risk. First Bancorp is currently generating about 0.11 per unit of risk. If you would invest 1,227 in Fulton Financial on August 25, 2024 and sell it today you would earn a total of 934.00 from holding Fulton Financial or generate 76.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fulton Financial vs. First Bancorp
Performance |
| Timeline |
| Fulton Financial |
| First Bancorp |
Fulton Financial and First Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fulton Financial and First Bancorp
The main advantage of trading using opposite Fulton Financial and First Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulton Financial position performs unexpectedly, First 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 First Bancorp will offset losses from the drop in First Bancorp's long position.| Fulton Financial vs. First Commonwealth Financial | Fulton Financial vs. Heritage Commerce Corp | Fulton Financial vs. Northwest Bancshares | Fulton Financial vs. First United |
| First Bancorp vs. Franklin Financial Services | First Bancorp vs. National Bank Holdings | First Bancorp vs. Bankwell Financial Group | First Bancorp vs. Finward Bancorp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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