Correlation Between First Commonwealth and Primis Financial
Can any of the company-specific risk be diversified away by investing in both First Commonwealth and Primis Financial 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 Commonwealth and Primis Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Commonwealth Financial and Primis Financial Corp, you can compare the effects of market volatilities on First Commonwealth and Primis Financial 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 Commonwealth with a short position of Primis Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Commonwealth and Primis Financial.
Diversification Opportunities for First Commonwealth and Primis Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Primis is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding First Commonwealth Financial and Primis Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primis Financial Corp and First Commonwealth 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 Commonwealth Financial are associated (or correlated) with Primis Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primis Financial Corp has no effect on the direction of First Commonwealth i.e., First Commonwealth and Primis Financial go up and down completely randomly.
Pair Corralation between First Commonwealth and Primis Financial
Considering the 90-day investment horizon First Commonwealth is expected to generate 1.34 times less return on investment than Primis Financial. But when comparing it to its historical volatility, First Commonwealth Financial is 1.12 times less risky than Primis Financial. It trades about 0.06 of its potential returns per unit of risk. Primis Financial Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 786.00 in Primis Financial Corp on September 7, 2024 and sell it today you would earn a total of 455.00 from holding Primis Financial Corp or generate 57.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
First Commonwealth Financial vs. Primis Financial Corp
Performance |
Timeline |
First Commonwealth |
Primis Financial Corp |
First Commonwealth and Primis Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Commonwealth and Primis Financial
The main advantage of trading using opposite First Commonwealth and Primis Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Commonwealth position performs unexpectedly, Primis Financial 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 Primis Financial will offset losses from the drop in Primis Financial's long position.First Commonwealth vs. German American Bancorp | First Commonwealth vs. Texas Capital Bancshares | First Commonwealth vs. Northfield Bancorp | First Commonwealth vs. First Northwest Bancorp |
Primis Financial vs. German American Bancorp | Primis Financial vs. Texas Capital Bancshares | Primis Financial vs. Northfield Bancorp | Primis Financial vs. First Northwest Bancorp |
Check out your portfolio center.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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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