Correlation Between National Bank and First Capital
Can any of the company-specific risk be diversified away by investing in both National Bank and First Capital 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 National Bank and First Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank of and First Capital, you can compare the effects of market volatilities on National Bank and First Capital 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 National Bank with a short position of First Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and First Capital.
Diversification Opportunities for National Bank and First Capital
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between National and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and First Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital and National Bank 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 National Bank of are associated (or correlated) with First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital has no effect on the direction of National Bank i.e., National Bank and First Capital go up and down completely randomly.
Pair Corralation between National Bank and First Capital
Assuming the 90 days horizon National Bank of is expected to generate 1.81 times more return on investment than First Capital. However, National Bank is 1.81 times more volatile than First Capital. It trades about 0.05 of its potential returns per unit of risk. First Capital is currently generating about 0.03 per unit of risk. If you would invest 439.00 in National Bank of on October 29, 2024 and sell it today you would earn a total of 421.00 from holding National Bank of or generate 95.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.58% |
| Values | Daily Returns |
National Bank of vs. First Capital
Performance |
| Timeline |
| National Bank |
| First Capital |
National Bank and First Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and First Capital
The main advantage of trading using opposite National Bank and First Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, First Capital 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 Capital will offset losses from the drop in First Capital's long position.| National Bank vs. First Hawaiian | National Bank vs. Central Pacific Financial | National Bank vs. Territorial Bancorp | National Bank vs. Comerica |
| First Capital vs. Home Federal Bancorp | First Capital vs. First Financial Northwest | First Capital vs. First Northwest Bancorp | First Capital vs. Community West Bancshares |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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