Correlation Between NYSE Composite and First Bancorp
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and First Bancorp 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 First Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and First Bancorp, you can compare the effects of market volatilities on NYSE Composite and First Bancorp 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 First Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and First Bancorp.
Diversification Opportunities for NYSE Composite and First Bancorp
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and First is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp 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 First Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancorp has no effect on the direction of NYSE Composite i.e., NYSE Composite and First Bancorp go up and down completely randomly.
Pair Corralation between NYSE Composite and First Bancorp
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.35 times more return on investment than First Bancorp. However, NYSE Composite is 2.82 times less risky than First Bancorp. It trades about 0.08 of its potential returns per unit of risk. First Bancorp is currently generating about 0.02 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 24, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. First Bancorp
Performance |
| Timeline |
NYSE Composite and First Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
First Bancorp
Pair trading matchups for First Bancorp
Pair Trading with NYSE Composite and First Bancorp
The main advantage of trading using opposite NYSE Composite and First Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, First Bancorp 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 Bancorp will offset losses from the drop in First Bancorp's long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| First Bancorp vs. Banco Bradesco SA | First Bancorp vs. Itau Unibanco Banco | First Bancorp vs. Banco Santander Brasil | First Bancorp vs. Western Alliance Bancorporation |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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