Correlation Between Lakeland Financial and First Community
Can any of the company-specific risk be diversified away by investing in both Lakeland Financial 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 Lakeland Financial and First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lakeland Financial and First Community Bancshares, you can compare the effects of market volatilities on Lakeland Financial 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 Lakeland Financial with a short position of First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lakeland Financial and First Community.
Diversification Opportunities for Lakeland Financial and First Community
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lakeland and First is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Financial 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 Lakeland Financial 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 Lakeland Financial 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 Lakeland Financial i.e., Lakeland Financial and First Community go up and down completely randomly.
Pair Corralation between Lakeland Financial and First Community
Given the investment horizon of 90 days Lakeland Financial is expected to generate 0.78 times more return on investment than First Community. However, Lakeland Financial is 1.28 times less risky than First Community. It trades about 0.21 of its potential returns per unit of risk. First Community Bancshares is currently generating about 0.14 per unit of risk. If you would invest 6,676 in Lakeland Financial on August 28, 2024 and sell it today you would earn a total of 909.00 from holding Lakeland Financial or generate 13.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lakeland Financial vs. First Community Bancshares
Performance |
| Timeline |
| Lakeland Financial |
| First Community Banc |
Lakeland Financial and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lakeland Financial and First Community
The main advantage of trading using opposite Lakeland Financial and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lakeland Financial 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.| Lakeland Financial vs. Home Bancorp | Lakeland Financial vs. Heritage Financial | Lakeland Financial vs. First Northwest Bancorp | Lakeland Financial vs. HomeTrust Bancshares |
| First Community vs. EvoAir Holdings | First Community vs. Air Lease | First Community vs. Titan International | First Community vs. CECO Environmental Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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