Correlation Between First Capital and Univest Pennsylvania

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

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

Diversification Opportunities for First Capital and Univest Pennsylvania

-0.7

Correlation Coefficient

First Capital  Univest Pennsylvania

Excellent diversification

The 3 months correlation between First and Univest is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and Univest Pennsylvania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univest Pennsylvania and First Capital 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 Capital are associated (or correlated) with Univest Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univest Pennsylvania has no effect on the direction of First Capital i.e., First Capital and Univest Pennsylvania go up and down completely randomly.

Pair Corralation between First Capital and Univest Pennsylvania

Given the investment horizon of 90 days First Capital is expected to under-perform the Univest Pennsylvania. But the stock apears to be less risky and, when comparing its historical volatility, First Capital is 1.25 times less risky than Univest Pennsylvania. The stock trades about -0.06 of its potential returns per unit of risk. The Univest Pennsylvania is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,849  in Univest Pennsylvania on October 6, 2024 and sell it today you would earn a total of  64.00  from holding Univest Pennsylvania or generate 2.25% return on investment over 90 days.

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

First Capital  vs.  Univest Pennsylvania

First Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Univest Pennsylvania

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Univest Pennsylvania are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Univest Pennsylvania may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with First Capital and Univest Pennsylvania

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

The idea behind First Capital and Univest Pennsylvania 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.