Correlation Between First Community and Peak Bancorp

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

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

Diversification Opportunities for First Community and Peak Bancorp

-0.78

Correlation Coefficient

First Community  Peak Bancorp

Pay attention - limited upside

The 3 months correlation between First and Peak is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding First Community and Peak Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peak Bancorp and First Community 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 Community are associated (or correlated) with Peak Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peak Bancorp has no effect on the direction of First Community i.e., First Community and Peak Bancorp go up and down completely randomly.

Pair Corralation between First Community and Peak Bancorp

If you would invest  2,180  in First Community on September 13, 2024 and sell it today you would earn a total of  421.00  from holding First Community or generate 19.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

First Community  vs.  Peak Bancorp

First Community

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Community are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, First Community displayed solid returns over the last few months and may actually be approaching a breakup point.

Peak Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peak Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Peak Bancorp 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 Community and Peak Bancorp

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

The idea behind First Community and Peak Bancorp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.