Correlation Between ST Bancorp and First Bancorp
Can any of the company-specific risk be diversified away by investing in both ST Bancorp 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 ST Bancorp and First Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ST Bancorp and First Bancorp, you can compare the effects of market volatilities on ST Bancorp 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 ST Bancorp with a short position of First Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ST Bancorp and First Bancorp.
Diversification Opportunities for ST Bancorp and First Bancorp
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between STBA and First is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ST Bancorp and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp and ST 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 ST Bancorp 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 ST Bancorp i.e., ST Bancorp and First Bancorp go up and down completely randomly.
Pair Corralation between ST Bancorp and First Bancorp
Given the investment horizon of 90 days ST Bancorp is expected to generate 1.13 times more return on investment than First Bancorp. However, ST Bancorp is 1.13 times more volatile than First Bancorp. It trades about 0.11 of its potential returns per unit of risk. First Bancorp is currently generating about 0.11 per unit of risk. If you would invest 2,451 in ST Bancorp on August 25, 2024 and sell it today you would earn a total of 1,893 from holding ST Bancorp or generate 77.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ST Bancorp vs. First Bancorp
Performance |
| Timeline |
| ST Bancorp |
| First Bancorp |
ST Bancorp and First Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ST Bancorp and First Bancorp
The main advantage of trading using opposite ST Bancorp and First Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ST Bancorp 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.| ST Bancorp vs. CrossFirst Bankshares | ST Bancorp vs. Enterprise Financial Services | ST Bancorp vs. The First Bancshares, | ST Bancorp vs. First Bancorp |
| First Bancorp vs. Franklin Financial Services | First Bancorp vs. National Bank Holdings | First Bancorp vs. Bankwell Financial Group | First Bancorp vs. Finward 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |