Correlation Between Main Street and First Keystone
Can any of the company-specific risk be diversified away by investing in both Main Street and First Keystone 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 Main Street and First Keystone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Financial and First Keystone Corp, you can compare the effects of market volatilities on Main Street and First Keystone 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 Main Street with a short position of First Keystone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and First Keystone.
Diversification Opportunities for Main Street and First Keystone
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Main and First is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Financial and First Keystone Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Keystone Corp and Main Street 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 Main Street Financial are associated (or correlated) with First Keystone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Keystone Corp has no effect on the direction of Main Street i.e., Main Street and First Keystone go up and down completely randomly.
Pair Corralation between Main Street and First Keystone
Given the investment horizon of 90 days Main Street Financial is expected to under-perform the First Keystone. But the otc stock apears to be less risky and, when comparing its historical volatility, Main Street Financial is 1.63 times less risky than First Keystone. The otc stock trades about -0.03 of its potential returns per unit of risk. The First Keystone Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,563 in First Keystone Corp on August 29, 2024 and sell it today you would lose (44.00) from holding First Keystone Corp or give up 2.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.65% |
| Values | Daily Returns |
Main Street Financial vs. First Keystone Corp
Performance |
| Timeline |
| Main Street Financial |
| First Keystone Corp |
Main Street and First Keystone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and First Keystone
The main advantage of trading using opposite Main Street and First Keystone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, First Keystone 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 Keystone will offset losses from the drop in First Keystone's long position.| Main Street vs. Israel Discount Bank | Main Street vs. Baraboo Bancorporation | Main Street vs. Danske Bank AS | Main Street vs. Jyske Bank AS |
| First Keystone vs. Citizens Bancorp Investment | First Keystone vs. Greenville Federal Financial | First Keystone vs. Oak Ridge Financial | First Keystone vs. Main Street Financial |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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