Correlation Between First Financial and Orrstown Financial
Can any of the company-specific risk be diversified away by investing in both First Financial and Orrstown Financial 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 First Financial and Orrstown Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Financial and Orrstown Financial Services, you can compare the effects of market volatilities on First Financial and Orrstown Financial 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 First Financial with a short position of Orrstown Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and Orrstown Financial.
Diversification Opportunities for First Financial and Orrstown Financial
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Orrstown is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Financial and Orrstown Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orrstown Financial and First Financial 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 First Financial are associated (or correlated) with Orrstown Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orrstown Financial has no effect on the direction of First Financial i.e., First Financial and Orrstown Financial go up and down completely randomly.
Pair Corralation between First Financial and Orrstown Financial
Given the investment horizon of 90 days First Financial is expected to generate 1.11 times more return on investment than Orrstown Financial. However, First Financial is 1.11 times more volatile than Orrstown Financial Services. It trades about 0.2 of its potential returns per unit of risk. Orrstown Financial Services is currently generating about 0.05 per unit of risk. If you would invest 4,532 in First Financial on November 3, 2024 and sell it today you would earn a total of 287.00 from holding First Financial or generate 6.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Financial vs. Orrstown Financial Services
Performance |
| Timeline |
| First Financial |
| Orrstown Financial |
First Financial and Orrstown Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and Orrstown Financial
The main advantage of trading using opposite First Financial and Orrstown Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, Orrstown Financial 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 Orrstown Financial will offset losses from the drop in Orrstown Financial's long position.| First Financial vs. Chemung Financial Corp | First Financial vs. Citizens Northern Corp | First Financial vs. National Bankshares | First Financial vs. Fidelity DD Bancorp |
| Orrstown Financial vs. Home Federal Bancorp | Orrstown Financial vs. LINKBANCORP | Orrstown Financial vs. Rhinebeck Bancorp | Orrstown Financial vs. Lake Shore 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |