Correlation Between Huntington Bancshares and First Community
Can any of the company-specific risk be diversified away by investing in both Huntington Bancshares and First Community 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 Huntington Bancshares and First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntington Bancshares Incorporated and First Community Bancshares, you can compare the effects of market volatilities on Huntington Bancshares and First Community 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 Huntington Bancshares with a short position of First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntington Bancshares and First Community.
Diversification Opportunities for Huntington Bancshares and First Community
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Huntington and First is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Bancshares Incorpor and First Community Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community Banc and Huntington Bancshares 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 Huntington Bancshares Incorporated are associated (or correlated) with First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community Banc has no effect on the direction of Huntington Bancshares i.e., Huntington Bancshares and First Community go up and down completely randomly.
Pair Corralation between Huntington Bancshares and First Community
Given the investment horizon of 90 days Huntington Bancshares is expected to generate 1.04 times less return on investment than First Community. In addition to that, Huntington Bancshares is 1.0 times more volatile than First Community Bancshares. It trades about 0.04 of its total potential returns per unit of risk. First Community Bancshares is currently generating about 0.04 per unit of volatility. If you would invest 3,347 in First Community Bancshares on August 30, 2024 and sell it today you would earn a total of 1,317 from holding First Community Bancshares or generate 39.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huntington Bancshares Incorpor vs. First Community Bancshares
Performance |
| Timeline |
| Huntington Bancshares |
| First Community Banc |
Huntington Bancshares and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huntington Bancshares and First Community
The main advantage of trading using opposite Huntington Bancshares and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Bancshares position performs unexpectedly, First Community 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 Community will offset losses from the drop in First Community's long position.| Huntington Bancshares vs. Zions Bancorporation | Huntington Bancshares vs. Comerica | Huntington Bancshares vs. Western Alliance Bancorporation | Huntington Bancshares vs. US Bancorp |
| First Community vs. Dana Inc | First Community vs. Jutal Offshore Oil | First Community vs. SBM Offshore NV | First Community vs. Marine Products |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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