Correlation Between LINKBANCORP and First Community
Can any of the company-specific risk be diversified away by investing in both LINKBANCORP 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 LINKBANCORP and First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LINKBANCORP and First Community Bancshares, you can compare the effects of market volatilities on LINKBANCORP 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 LINKBANCORP with a short position of First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of LINKBANCORP and First Community.
Diversification Opportunities for LINKBANCORP and First Community
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LINKBANCORP and First is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding LINKBANCORP 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 LINKBANCORP 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 LINKBANCORP 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 LINKBANCORP i.e., LINKBANCORP and First Community go up and down completely randomly.
Pair Corralation between LINKBANCORP and First Community
Given the investment horizon of 90 days LINKBANCORP is expected to generate 2.71 times less return on investment than First Community. In addition to that, LINKBANCORP is 1.16 times more volatile than First Community Bancshares. It trades about 0.01 of its total potential returns per unit of risk. First Community Bancshares is currently generating about 0.04 per unit of volatility. If you would invest 3,376 in First Community Bancshares on September 3, 2024 and sell it today you would earn a total of 1,241 from holding First Community Bancshares or generate 36.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LINKBANCORP vs. First Community Bancshares
Performance |
| Timeline |
| LINKBANCORP |
| First Community Banc |
LINKBANCORP and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LINKBANCORP and First Community
The main advantage of trading using opposite LINKBANCORP and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LINKBANCORP 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.| LINKBANCORP vs. Home Federal Bancorp | LINKBANCORP vs. Lake Shore Bancorp | LINKBANCORP vs. Community West Bancshares | LINKBANCORP vs. Magyar Bancorp |
| First Community vs. JPMorgan Chase Co | First Community vs. Citigroup | First Community vs. Wells Fargo | First Community vs. Toronto Dominion Bank |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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