Correlation Between WSFS Financial and First Bancorp
Can any of the company-specific risk be diversified away by investing in both WSFS 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 WSFS 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 WSFS Financial and First Bancorp, you can compare the effects of market volatilities on WSFS 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 WSFS Financial with a short position of First Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of WSFS Financial and First Bancorp.
Diversification Opportunities for WSFS Financial and First Bancorp
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WSFS and First is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding WSFS Financial and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp and WSFS 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 WSFS Financial 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 WSFS Financial i.e., WSFS Financial and First Bancorp go up and down completely randomly.
Pair Corralation between WSFS Financial and First Bancorp
Given the investment horizon of 90 days WSFS Financial is expected to under-perform the First Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, WSFS Financial is 1.08 times less risky than First Bancorp. The stock trades about -0.17 of its potential returns per unit of risk. The First Bancorp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3,857 in First Bancorp on January 9, 2025 and sell it today you would lose (38.00) from holding First Bancorp or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WSFS Financial vs. First Bancorp
Performance |
| Timeline |
| WSFS Financial |
| First Bancorp |
WSFS Financial and First Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WSFS Financial and First Bancorp
The main advantage of trading using opposite WSFS Financial and First Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WSFS 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.| WSFS Financial vs. Western New England | WSFS Financial vs. Great Southern Bancorp | WSFS Financial vs. First Financial | WSFS Financial vs. Heritage Financial |
| First Bancorp vs. Camden National | First Bancorp vs. Bank of Marin | First Bancorp vs. Arrow Financial | First Bancorp vs. Auburn National Bancorporation |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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