Correlation Between First Bancshares, and Meten Edtechx

Can any of the company-specific risk be diversified away by investing in both First Bancshares, and Meten Edtechx 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 Bancshares, and Meten Edtechx into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The First Bancshares, and Meten Edtechx Education, you can compare the effects of market volatilities on First Bancshares, and Meten Edtechx 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 Bancshares, with a short position of Meten Edtechx. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancshares, and Meten Edtechx.

Diversification Opportunities for First Bancshares, and Meten Edtechx

-0.38

Correlation Coefficient

First Bancshares,  Meten Edtechx

Very good diversification

The 3 months correlation between First and Meten is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding The First Bancshares, and Meten Edtechx Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meten Edtechx Education and First Bancshares, 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 The First Bancshares, are associated (or correlated) with Meten Edtechx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meten Edtechx Education has no effect on the direction of First Bancshares, i.e., First Bancshares, and Meten Edtechx go up and down completely randomly.

Pair Corralation between First Bancshares, and Meten Edtechx

Given the investment horizon of 90 days The First Bancshares, is expected to generate 0.42 times more return on investment than Meten Edtechx. However, The First Bancshares, is 2.36 times less risky than Meten Edtechx. It trades about 0.03 of its potential returns per unit of risk. Meten Edtechx Education is currently generating about -0.08 per unit of risk. If you would invest  2,981  in The First Bancshares, on September 26, 2024 and sell it today you would earn a total of  515.00  from holding The First Bancshares, or generate 17.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	24.63%
Values	Daily Returns

The First Bancshares,  vs.  Meten Edtechx Education

First Bancshares,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The First Bancshares, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, First Bancshares, unveiled solid returns over the last few months and may actually be approaching a breakup point.

Meten Edtechx Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meten Edtechx Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Meten Edtechx is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Bancshares, and Meten Edtechx

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

The idea behind The First Bancshares, and Meten Edtechx Education 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.