Correlation Between First CommunityPFD and Parkway Acquisition

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

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

Diversification Opportunities for First CommunityPFD and Parkway Acquisition

-0.3

Correlation Coefficient

First CommunityPFD  Parkway Acquisition

Very good diversification

The 3 months correlation between First and Parkway is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding First Community and Parkway Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parkway Acquisition Corp and First CommunityPFD 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 Parkway Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parkway Acquisition Corp has no effect on the direction of First CommunityPFD i.e., First CommunityPFD and Parkway Acquisition go up and down completely randomly.

Pair Corralation between First CommunityPFD and Parkway Acquisition

If you would invest  875.00  in First Community on September 3, 2024 and sell it today you would earn a total of  15.00  from holding First Community or generate 1.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

First Community  vs.  Parkway Acquisition Corp

First CommunityPFD

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Community are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, First CommunityPFD is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Parkway Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Parkway Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward-looking signals, Parkway Acquisition is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First CommunityPFD and Parkway Acquisition

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

The idea behind First Community and Parkway Acquisition Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.