Correlation Between FIRST SAVINGS and Patterson Companies

Can any of the company-specific risk be diversified away by investing in both FIRST SAVINGS and Patterson Companies 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 SAVINGS and Patterson Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FIRST SAVINGS FINL and Patterson Companies, you can compare the effects of market volatilities on FIRST SAVINGS and Patterson Companies 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 SAVINGS with a short position of Patterson Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST SAVINGS and Patterson Companies.

Diversification Opportunities for FIRST SAVINGS and Patterson Companies

0.21

Correlation Coefficient

FIRST SAVINGS  Patterson Companies

Modest diversification

The 3 months correlation between FIRST and Patterson is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SAVINGS FINL and Patterson Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson Companies and FIRST SAVINGS 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 SAVINGS FINL are associated (or correlated) with Patterson Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson Companies has no effect on the direction of FIRST SAVINGS i.e., FIRST SAVINGS and Patterson Companies go up and down completely randomly.

Pair Corralation between FIRST SAVINGS and Patterson Companies

Assuming the 90 days horizon FIRST SAVINGS FINL is expected to under-perform the Patterson Companies. But the stock apears to be less risky and, when comparing its historical volatility, FIRST SAVINGS FINL is 2.55 times less risky than Patterson Companies. The stock trades about -0.24 of its potential returns per unit of risk. The Patterson Companies is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  2,140  in Patterson Companies on October 10, 2024 and sell it today you would earn a total of  820.00  from holding Patterson Companies or generate 38.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

FIRST SAVINGS FINL  vs.  Patterson Companies

FIRST SAVINGS FINL

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST SAVINGS FINL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FIRST SAVINGS reported solid returns over the last few months and may actually be approaching a breakup point.

Patterson Companies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson Companies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Patterson Companies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FIRST SAVINGS and Patterson Companies

The main advantage of trading using opposite FIRST SAVINGS and Patterson Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST SAVINGS position performs unexpectedly, Patterson Companies 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 Patterson Companies will offset losses from the drop in Patterson Companies' long position.

The idea behind FIRST SAVINGS FINL and Patterson Companies 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..