Correlation Between IF Bancorp and First Capital
Can any of the company-specific risk be diversified away by investing in both IF Bancorp and First Capital 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 IF Bancorp and First Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IF Bancorp and First Capital, you can compare the effects of market volatilities on IF Bancorp and First Capital 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 IF Bancorp with a short position of First Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of IF Bancorp and First Capital.
Diversification Opportunities for IF Bancorp and First Capital
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IROQ and First is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding IF Bancorp and First Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital and IF Bancorp 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 IF Bancorp are associated (or correlated) with First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital has no effect on the direction of IF Bancorp i.e., IF Bancorp and First Capital go up and down completely randomly.
Pair Corralation between IF Bancorp and First Capital
Given the investment horizon of 90 days IF Bancorp is expected to generate 1.68 times more return on investment than First Capital. However, IF Bancorp is 1.68 times more volatile than First Capital. It trades about 0.05 of its potential returns per unit of risk. First Capital is currently generating about -0.47 per unit of risk. If you would invest 2,138 in IF Bancorp on August 31, 2024 and sell it today you would earn a total of 41.00 from holding IF Bancorp or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IF Bancorp vs. First Capital
Performance |
| Timeline |
| IF Bancorp |
| First Capital |
IF Bancorp and First Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IF Bancorp and First Capital
The main advantage of trading using opposite IF Bancorp and First Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IF Bancorp position performs unexpectedly, First Capital 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 Capital will offset losses from the drop in First Capital's long position.| IF Bancorp vs. Home Bancorp | IF Bancorp vs. Commerzbank AG PK | IF Bancorp vs. ConnectOne Bancorp | IF Bancorp vs. Home Federal Bancorp |
| First Capital vs. KeyCorp | First Capital vs. Comerica | First Capital vs. First Horizon National | First Capital vs. Western Alliance Bancorporation |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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