Correlation Between Hilltop Holdings and First Bancorp
Can any of the company-specific risk be diversified away by investing in both Hilltop Holdings 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 Hilltop Holdings and First Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilltop Holdings and First Bancorp, you can compare the effects of market volatilities on Hilltop Holdings 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 Hilltop Holdings with a short position of First Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilltop Holdings and First Bancorp.
Diversification Opportunities for Hilltop Holdings and First Bancorp
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hilltop and First is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hilltop Holdings and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp and Hilltop Holdings 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 Hilltop Holdings 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 Hilltop Holdings i.e., Hilltop Holdings and First Bancorp go up and down completely randomly.
Pair Corralation between Hilltop Holdings and First Bancorp
Considering the 90-day investment horizon Hilltop Holdings is expected to generate 0.91 times more return on investment than First Bancorp. However, Hilltop Holdings is 1.1 times less risky than First Bancorp. It trades about 0.24 of its potential returns per unit of risk. First Bancorp is currently generating about -0.13 per unit of risk. If you would invest 2,874 in Hilltop Holdings on November 25, 2024 and sell it today you would earn a total of 240.00 from holding Hilltop Holdings or generate 8.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Hilltop Holdings vs. First Bancorp
Performance |
Timeline |
Hilltop Holdings |
First Bancorp |
Hilltop Holdings and First Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hilltop Holdings and First Bancorp
The main advantage of trading using opposite Hilltop Holdings and First Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilltop Holdings 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.Hilltop Holdings vs. Home Federal Bancorp | ||
Hilltop Holdings vs. First Financial Northwest | ||
Hilltop Holdings vs. First Northwest Bancorp | ||
Hilltop Holdings vs. First Capital |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |