Correlation Between Woodlands Financial and First Bancorp
Can any of the company-specific risk be diversified away by investing in both Woodlands Financial 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 Woodlands Financial and First Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woodlands Financial Services and First Bancorp, you can compare the effects of market volatilities on Woodlands Financial 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 Woodlands Financial with a short position of First Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodlands Financial and First Bancorp.
Diversification Opportunities for Woodlands Financial and First Bancorp
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Woodlands and First is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Woodlands Financial Services and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp and Woodlands 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 Woodlands Financial Services 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 Woodlands Financial i.e., Woodlands Financial and First Bancorp go up and down completely randomly.
Pair Corralation between Woodlands Financial and First Bancorp
Given the investment horizon of 90 days Woodlands Financial Services is expected to under-perform the First Bancorp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Woodlands Financial Services is 1.85 times less risky than First Bancorp. The pink sheet trades about -0.1 of its potential returns per unit of risk. The First Bancorp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,170 in First Bancorp on September 1, 2024 and sell it today you would earn a total of 560.00 from holding First Bancorp or generate 13.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woodlands Financial Services vs. First Bancorp
Performance |
| Timeline |
| Woodlands Financial |
| First Bancorp |
Woodlands Financial and First Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodlands Financial and First Bancorp
The main advantage of trading using opposite Woodlands Financial and First Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodlands Financial 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.| Woodlands Financial vs. Bank Mandiri Persero | Woodlands Financial vs. Piraeus Bank SA | Woodlands Financial vs. Kasikornbank Public Co | Woodlands Financial vs. Turkiye Garanti Bankasi |
| First Bancorp vs. Home Bancorp | First Bancorp vs. First Business Financial | First Bancorp vs. LINKBANCORP | First Bancorp vs. Great Southern 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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