Correlation Between Parke Bancorp and First Keystone
Can any of the company-specific risk be diversified away by investing in both Parke Bancorp 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 Parke Bancorp and First Keystone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parke Bancorp and First Keystone Corp, you can compare the effects of market volatilities on Parke Bancorp 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 Parke Bancorp with a short position of First Keystone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parke Bancorp and First Keystone.
Diversification Opportunities for Parke Bancorp and First Keystone
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Parke and First is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Parke Bancorp 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 Parke Bancorp 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 Parke Bancorp 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 Parke Bancorp i.e., Parke Bancorp and First Keystone go up and down completely randomly.
Pair Corralation between Parke Bancorp and First Keystone
Given the investment horizon of 90 days Parke Bancorp is expected to generate 1.35 times less return on investment than First Keystone. But when comparing it to its historical volatility, Parke Bancorp is 2.24 times less risky than First Keystone. It trades about 0.03 of its potential returns per unit of risk. First Keystone Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,876 in First Keystone Corp on September 3, 2024 and sell it today you would lose (224.00) from holding First Keystone Corp or give up 11.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.31% |
| Values | Daily Returns |
Parke Bancorp vs. First Keystone Corp
Performance |
| Timeline |
| Parke Bancorp |
| First Keystone Corp |
Parke Bancorp and First Keystone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parke Bancorp and First Keystone
The main advantage of trading using opposite Parke Bancorp and First Keystone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parke Bancorp 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.| Parke Bancorp vs. Sound Financial Bancorp | Parke Bancorp vs. Finward Bancorp | Parke Bancorp vs. Franklin Financial Services | Parke Bancorp vs. Community West Bancshares |
| First Keystone vs. Western Asset Global | First Keystone vs. Invesco Trust For | First Keystone vs. Logan Ridge Finance | First Keystone vs. Invesco Advantage MIT |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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