Correlation Between Peoples Fin and First Business
Can any of the company-specific risk be diversified away by investing in both Peoples Fin and First Business 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 Peoples Fin and First Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peoples Fin and First Business Financial, you can compare the effects of market volatilities on Peoples Fin and First Business 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 Peoples Fin with a short position of First Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peoples Fin and First Business.
Diversification Opportunities for Peoples Fin and First Business
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Peoples and First is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Fin and First Business Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Business Financial and Peoples Fin 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 Peoples Fin are associated (or correlated) with First Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Business Financial has no effect on the direction of Peoples Fin i.e., Peoples Fin and First Business go up and down completely randomly.
Pair Corralation between Peoples Fin and First Business
Given the investment horizon of 90 days Peoples Fin is expected to under-perform the First Business. In addition to that, Peoples Fin is 1.07 times more volatile than First Business Financial. It trades about -0.19 of its total potential returns per unit of risk. First Business Financial is currently generating about -0.14 per unit of volatility. If you would invest 5,276 in First Business Financial on January 15, 2025 and sell it today you would lose (700.00) from holding First Business Financial or give up 13.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peoples Fin vs. First Business Financial
Performance |
| Timeline |
| Peoples Fin |
| First Business Financial |
Peoples Fin and First Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peoples Fin and First Business
The main advantage of trading using opposite Peoples Fin and First Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peoples Fin position performs unexpectedly, First Business 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 Business will offset losses from the drop in First Business' long position.| Peoples Fin vs. Home Federal Bancorp | Peoples Fin vs. Magyar Bancorp | Peoples Fin vs. Finward Bancorp | Peoples Fin vs. Community West Bancshares |
| First Business vs. Home Federal Bancorp | First Business vs. Lake Shore Bancorp | First Business vs. Old Point Financial | First Business vs. Parke Bancorp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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