Correlation Between International Bancshares and First Guaranty
Can any of the company-specific risk be diversified away by investing in both International Bancshares and First Guaranty 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 International Bancshares and First Guaranty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Bancshares and First Guaranty Bancshares, you can compare the effects of market volatilities on International Bancshares and First Guaranty 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 International Bancshares with a short position of First Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Bancshares and First Guaranty.
Diversification Opportunities for International Bancshares and First Guaranty
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and First is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding International Bancshares and First Guaranty Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Guaranty Bancshares and International 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 International Bancshares are associated (or correlated) with First Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Guaranty Bancshares has no effect on the direction of International Bancshares i.e., International Bancshares and First Guaranty go up and down completely randomly.
Pair Corralation between International Bancshares and First Guaranty
Given the investment horizon of 90 days International Bancshares is expected to generate 1.25 times less return on investment than First Guaranty. In addition to that, International Bancshares is 1.14 times more volatile than First Guaranty Bancshares. It trades about 0.11 of its total potential returns per unit of risk. First Guaranty Bancshares is currently generating about 0.16 per unit of volatility. If you would invest 1,014 in First Guaranty Bancshares on September 5, 2024 and sell it today you would earn a total of 461.00 from holding First Guaranty Bancshares or generate 45.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Bancshares vs. First Guaranty Bancshares
Performance |
| Timeline |
| International Bancshares |
| First Guaranty Bancshares |
International Bancshares and First Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Bancshares and First Guaranty
The main advantage of trading using opposite International Bancshares and First Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Bancshares position performs unexpectedly, First Guaranty 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 Guaranty will offset losses from the drop in First Guaranty's long position.The idea behind International Bancshares and First Guaranty Bancshares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| First Guaranty vs. Finward Bancorp | First Guaranty vs. Aquagold International | First Guaranty vs. Thrivent High Yield | First Guaranty vs. Morningstar Unconstrained Allocation |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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