Correlation Between Prime Meridian and FirstSun Capital
Can any of the company-specific risk be diversified away by investing in both Prime Meridian and FirstSun 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 Prime Meridian and FirstSun Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Meridian Holding and FirstSun Capital Bancorp, you can compare the effects of market volatilities on Prime Meridian and FirstSun 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 Prime Meridian with a short position of FirstSun Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Meridian and FirstSun Capital.
Diversification Opportunities for Prime Meridian and FirstSun Capital
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prime and FirstSun is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Prime Meridian Holding and FirstSun Capital Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstSun Capital Bancorp and Prime Meridian 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 Prime Meridian Holding are associated (or correlated) with FirstSun Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstSun Capital Bancorp has no effect on the direction of Prime Meridian i.e., Prime Meridian and FirstSun Capital go up and down completely randomly.
Pair Corralation between Prime Meridian and FirstSun Capital
Given the investment horizon of 90 days Prime Meridian Holding is expected to generate 1.61 times more return on investment than FirstSun Capital. However, Prime Meridian is 1.61 times more volatile than FirstSun Capital Bancorp. It trades about 0.06 of its potential returns per unit of risk. FirstSun Capital Bancorp is currently generating about 0.03 per unit of risk. If you would invest 2,398 in Prime Meridian Holding on August 28, 2024 and sell it today you would earn a total of 501.00 from holding Prime Meridian Holding or generate 20.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.56% |
| Values | Daily Returns |
Prime Meridian Holding vs. FirstSun Capital Bancorp
Performance |
| Timeline |
| Prime Meridian Holding |
| FirstSun Capital Bancorp |
Prime Meridian and FirstSun Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Meridian and FirstSun Capital
The main advantage of trading using opposite Prime Meridian and FirstSun Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Meridian position performs unexpectedly, FirstSun 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 FirstSun Capital will offset losses from the drop in FirstSun Capital's long position.The idea behind Prime Meridian Holding and FirstSun Capital Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| FirstSun Capital vs. Prime Meridian Holding | FirstSun Capital vs. William Penn Bancorp | FirstSun Capital vs. Pathfinder Bancorp | FirstSun Capital vs. Enterprise Financial Services |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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