Correlation Between FIRST SAVINGS and MARKET VECTR

Can any of the company-specific risk be diversified away by investing in both FIRST SAVINGS and MARKET VECTR 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 MARKET VECTR 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 MARKET VECTR RETAIL, you can compare the effects of market volatilities on FIRST SAVINGS and MARKET VECTR 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 MARKET VECTR. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST SAVINGS and MARKET VECTR.

Diversification Opportunities for FIRST SAVINGS and MARKET VECTR

0.85

Correlation Coefficient

FIRST SAVINGS  MARKET VECTR

Very poor diversification

The 3 months correlation between FIRST and MARKET is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SAVINGS FINL and MARKET VECTR RETAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARKET VECTR RETAIL 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 MARKET VECTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARKET VECTR RETAIL has no effect on the direction of FIRST SAVINGS i.e., FIRST SAVINGS and MARKET VECTR go up and down completely randomly.

Pair Corralation between FIRST SAVINGS and MARKET VECTR

Assuming the 90 days horizon FIRST SAVINGS is expected to generate 2.12 times less return on investment than MARKET VECTR. In addition to that, FIRST SAVINGS is 3.28 times more volatile than MARKET VECTR RETAIL. It trades about 0.03 of its total potential returns per unit of risk. MARKET VECTR RETAIL is currently generating about 0.24 per unit of volatility. If you would invest  20,105  in MARKET VECTR RETAIL on October 6, 2024 and sell it today you would earn a total of  1,840  from holding MARKET VECTR RETAIL or generate 9.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

FIRST SAVINGS FINL  vs.  MARKET VECTR RETAIL

FIRST SAVINGS FINL

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST SAVINGS FINL are ranked lower than 11 (%) 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.

MARKET VECTR RETAIL

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MARKET VECTR RETAIL are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, MARKET VECTR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FIRST SAVINGS and MARKET VECTR

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

The idea behind FIRST SAVINGS FINL and MARKET VECTR RETAIL 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.