Correlation Between Lewis Clark and First Community
Can any of the company-specific risk be diversified away by investing in both Lewis Clark 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 Lewis Clark and First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lewis Clark Bancorp and First Community, you can compare the effects of market volatilities on Lewis Clark 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 Lewis Clark with a short position of First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lewis Clark and First Community.
Diversification Opportunities for Lewis Clark and First Community
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lewis and First is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lewis Clark Bancorp and First Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community and Lewis Clark 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 Lewis Clark Bancorp 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 has no effect on the direction of Lewis Clark i.e., Lewis Clark and First Community go up and down completely randomly.
Pair Corralation between Lewis Clark and First Community
Given the investment horizon of 90 days Lewis Clark Bancorp is expected to generate 1.56 times more return on investment than First Community. However, Lewis Clark is 1.56 times more volatile than First Community. It trades about 0.06 of its potential returns per unit of risk. First Community is currently generating about -0.01 per unit of risk. If you would invest 2,250 in Lewis Clark Bancorp on August 31, 2024 and sell it today you would earn a total of 750.00 from holding Lewis Clark Bancorp or generate 33.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 84.8% |
Values | Daily Returns |
Lewis Clark Bancorp vs. First Community
Performance |
Timeline |
Lewis Clark Bancorp |
First Community |
Lewis Clark and First Community Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lewis Clark and First Community
The main advantage of trading using opposite Lewis Clark and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lewis Clark 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.Lewis Clark vs. Bank Mandiri Persero | Lewis Clark vs. Piraeus Bank SA | Lewis Clark vs. Eurobank Ergasias Services | Lewis Clark vs. Kasikornbank Public Co |
First Community vs. Bank Mandiri Persero | First Community vs. Piraeus Bank SA | First Community vs. Eurobank Ergasias Services | First Community vs. Kasikornbank Public Co |
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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