Correlation Between Magnite and First Community
Can any of the company-specific risk be diversified away by investing in both Magnite 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 Magnite and First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnite and First Community Bancshares, you can compare the effects of market volatilities on Magnite 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 Magnite with a short position of First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnite and First Community.
Diversification Opportunities for Magnite and First Community
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magnite and First is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Magnite 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 Magnite 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 Magnite 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 Magnite i.e., Magnite and First Community go up and down completely randomly.
Pair Corralation between Magnite and First Community
Given the investment horizon of 90 days Magnite is expected to generate 1.1 times more return on investment than First Community. However, Magnite is 1.1 times more volatile than First Community Bancshares. It trades about 0.36 of its potential returns per unit of risk. First Community Bancshares is currently generating about 0.16 per unit of risk. If you would invest 1,241 in Magnite on September 2, 2024 and sell it today you would earn a total of 438.00 from holding Magnite or generate 35.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnite vs. First Community Bancshares
Performance |
| Timeline |
| Magnite |
| First Community Banc |
Magnite and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnite and First Community
The main advantage of trading using opposite Magnite and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnite 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.| Magnite vs. Deluxe | Magnite vs. Clear Channel Outdoor | Magnite vs. Entravision Communications | Magnite vs. Innovid Corp |
| First Community vs. Affinity Bancshares | First Community vs. Auburn National Bancorporation | First Community vs. First Community | First Community vs. LINKBANCORP |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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