Correlation Between First Bancorp and 693627AY7

Can any of the company-specific risk be diversified away by investing in both First Bancorp and 693627AY7 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 Bancorp and 693627AY7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Bancorp and PSI ENERGY INC, you can compare the effects of market volatilities on First Bancorp and 693627AY7 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 Bancorp with a short position of 693627AY7. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancorp and 693627AY7.

Diversification Opportunities for First Bancorp and 693627AY7

-0.6

Correlation Coefficient

First Bancorp  693627AY7

Excellent diversification

The 3 months correlation between First and 693627AY7 is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding First Bancorp and PSI ENERGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSI ENERGY INC and First Bancorp 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 Bancorp are associated (or correlated) with 693627AY7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSI ENERGY INC has no effect on the direction of First Bancorp i.e., First Bancorp and 693627AY7 go up and down completely randomly.

Pair Corralation between First Bancorp and 693627AY7

Given the investment horizon of 90 days First Bancorp is expected to generate 1.84 times more return on investment than 693627AY7. However, First Bancorp is 1.84 times more volatile than PSI ENERGY INC. It trades about 0.1 of its potential returns per unit of risk. PSI ENERGY INC is currently generating about -0.01 per unit of risk. If you would invest  4,225  in First Bancorp on August 30, 2024 and sell it today you would earn a total of  561.00  from holding First Bancorp or generate 13.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	68.75%
Values	Daily Returns

First Bancorp  vs.  PSI ENERGY INC

First Bancorp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Bancorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, First Bancorp exhibited solid returns over the last few months and may actually be approaching a breakup point.

PSI ENERGY INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PSI ENERGY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 693627AY7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Bancorp and 693627AY7

The main advantage of trading using opposite First Bancorp and 693627AY7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancorp position performs unexpectedly, 693627AY7 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 693627AY7 will offset losses from the drop in 693627AY7's long position.

The idea behind First Bancorp and PSI ENERGY INC 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.