Correlation Between Grand River and First Bancorp
Can any of the company-specific risk be diversified away by investing in both Grand River 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 Grand River and First Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand River Commerce and First Bancorp, you can compare the effects of market volatilities on Grand River 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 Grand River with a short position of First Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand River and First Bancorp.
Diversification Opportunities for Grand River and First Bancorp
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grand and First is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Grand River Commerce and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp and Grand River 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 Grand River Commerce 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 Grand River i.e., Grand River and First Bancorp go up and down completely randomly.
Pair Corralation between Grand River and First Bancorp
Given the investment horizon of 90 days Grand River is expected to generate 4.5 times less return on investment than First Bancorp. In addition to that, Grand River is 1.12 times more volatile than First Bancorp. It trades about 0.04 of its total potential returns per unit of risk. First Bancorp is currently generating about 0.2 per unit of volatility. If you would invest 4,170 in First Bancorp on September 1, 2024 and sell it today you would earn a total of 560.00 from holding First Bancorp or generate 13.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand River Commerce vs. First Bancorp
Performance |
| Timeline |
| Grand River Commerce |
| First Bancorp |
Grand River and First Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand River and First Bancorp
The main advantage of trading using opposite Grand River and First Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand River 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.| Grand River vs. FS Bancorp | Grand River vs. Eastern Michigan Financial | Grand River vs. Bank of Botetourt | Grand River vs. FNB Inc |
| First Bancorp vs. Home Bancorp | First Bancorp vs. First Business Financial | First Bancorp vs. LINKBANCORP | First Bancorp vs. Great Southern 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |