Correlation Between Greenville Federal and First Ottawa
Can any of the company-specific risk be diversified away by investing in both Greenville Federal and First Ottawa 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 Greenville Federal and First Ottawa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greenville Federal Financial and First Ottawa Bancshares, you can compare the effects of market volatilities on Greenville Federal and First Ottawa 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 Greenville Federal with a short position of First Ottawa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greenville Federal and First Ottawa.
Diversification Opportunities for Greenville Federal and First Ottawa
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Greenville and First is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Greenville Federal Financial and First Ottawa Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Ottawa Bancshares and Greenville Federal 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 Greenville Federal Financial are associated (or correlated) with First Ottawa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Ottawa Bancshares has no effect on the direction of Greenville Federal i.e., Greenville Federal and First Ottawa go up and down completely randomly.
Pair Corralation between Greenville Federal and First Ottawa
Given the investment horizon of 90 days Greenville Federal Financial is expected to under-perform the First Ottawa. But the pink sheet apears to be less risky and, when comparing its historical volatility, Greenville Federal Financial is 1.1 times less risky than First Ottawa. The pink sheet trades about -0.3 of its potential returns per unit of risk. The First Ottawa Bancshares is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 11,500 in First Ottawa Bancshares on August 29, 2024 and sell it today you would earn a total of 501.00 from holding First Ottawa Bancshares or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Greenville Federal Financial vs. First Ottawa Bancshares
Performance |
| Timeline |
| Greenville Federal |
| First Ottawa Bancshares |
Greenville Federal and First Ottawa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greenville Federal and First Ottawa
The main advantage of trading using opposite Greenville Federal and First Ottawa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greenville Federal position performs unexpectedly, First Ottawa 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 Ottawa will offset losses from the drop in First Ottawa's long position.| Greenville Federal vs. First Bankers Trustshares | Greenville Federal vs. First Ottawa Bancshares | Greenville Federal vs. Coastal Carolina Bancshares | Greenville Federal vs. Citizens Bancorp Investment |
| First Ottawa vs. Century Next Financial | First Ottawa vs. Citizens Financial Corp | First Ottawa vs. Triad Business Bank | First Ottawa vs. First Bankers Trustshares |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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