Correlation Between Kentucky First and Main Street
Can any of the company-specific risk be diversified away by investing in both Kentucky First and Main Street 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 Kentucky First and Main Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kentucky First Federal and Main Street Financial, you can compare the effects of market volatilities on Kentucky First and Main Street 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 Kentucky First with a short position of Main Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kentucky First and Main Street.
Diversification Opportunities for Kentucky First and Main Street
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kentucky and Main is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Kentucky First Federal and Main Street Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Street Financial and Kentucky First 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 Kentucky First Federal are associated (or correlated) with Main Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Street Financial has no effect on the direction of Kentucky First i.e., Kentucky First and Main Street go up and down completely randomly.
Pair Corralation between Kentucky First and Main Street
Given the investment horizon of 90 days Kentucky First Federal is expected to under-perform the Main Street. In addition to that, Kentucky First is 1.51 times more volatile than Main Street Financial. It trades about -0.05 of its total potential returns per unit of risk. Main Street Financial is currently generating about -0.03 per unit of volatility. If you would invest 1,567 in Main Street Financial on August 26, 2024 and sell it today you would lose (147.00) from holding Main Street Financial or give up 9.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Kentucky First Federal vs. Main Street Financial
Performance |
| Timeline |
| Kentucky First Federal |
| Main Street Financial |
Kentucky First and Main Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kentucky First and Main Street
The main advantage of trading using opposite Kentucky First and Main Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kentucky First position performs unexpectedly, Main Street 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 Main Street will offset losses from the drop in Main Street's long position.| Kentucky First vs. Home Federal Bancorp | Kentucky First vs. Lake Shore Bancorp | Kentucky First vs. Commerzbank AG | Kentucky First vs. Investar Holding Corp |
| Main Street vs. CCFNB Bancorp | Main Street vs. Burke Herbert Financial | Main Street vs. First IC | Main Street vs. Enterprise Financial Services |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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