Correlation Between NYSE Composite and Bank First
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Bank First 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 NYSE Composite and Bank First into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Bank First National, you can compare the effects of market volatilities on NYSE Composite and Bank First 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 NYSE Composite with a short position of Bank First. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Bank First.
Diversification Opportunities for NYSE Composite and Bank First
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Bank is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Bank First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank First National and NYSE Composite 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 NYSE Composite are associated (or correlated) with Bank First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank First National has no effect on the direction of NYSE Composite i.e., NYSE Composite and Bank First go up and down completely randomly.
Pair Corralation between NYSE Composite and Bank First
Assuming the 90 days trading horizon NYSE Composite is expected to generate 4.29 times less return on investment than Bank First. But when comparing it to its historical volatility, NYSE Composite is 5.42 times less risky than Bank First. It trades about 0.24 of its potential returns per unit of risk. Bank First National is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 9,300 in Bank First National on August 28, 2024 and sell it today you would earn a total of 1,328 from holding Bank First National or generate 14.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Bank First National
Performance |
| Timeline |
NYSE Composite and Bank First Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Bank First National
Pair trading matchups for Bank First
Pair Trading with NYSE Composite and Bank First
The main advantage of trading using opposite NYSE Composite and Bank First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Bank First 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 Bank First will offset losses from the drop in Bank First's long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Bank First vs. Fifth Third Bancorp | Bank First vs. Huntington Bancshares Incorporated | Bank First vs. MT 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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