Correlation Between First Guaranty and LINKBANCORP

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

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

Diversification Opportunities for First Guaranty and LINKBANCORP

0.67

Correlation Coefficient

First Guaranty  LINKBANCORP

Poor diversification

The 3 months correlation between First and LINKBANCORP is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding First Guaranty Bancshares and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP and First Guaranty 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 Guaranty Bancshares are associated (or correlated) with LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of First Guaranty i.e., First Guaranty and LINKBANCORP go up and down completely randomly.

Pair Corralation between First Guaranty and LINKBANCORP

Given the investment horizon of 90 days First Guaranty Bancshares is expected to under-perform the LINKBANCORP. But the stock apears to be less risky and, when comparing its historical volatility, First Guaranty Bancshares is 1.02 times less risky than LINKBANCORP. The stock trades about -0.36 of its potential returns per unit of risk. The LINKBANCORP is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  751.00  in LINKBANCORP on October 20, 2024 and sell it today you would lose (23.00) from holding LINKBANCORP or give up 3.06% of portfolio value over 90 days.

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

First Guaranty Bancshares  vs.  LINKBANCORP

First Guaranty Bancshares

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Guaranty Bancshares are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, First Guaranty is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

LINKBANCORP

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LINKBANCORP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting forward-looking signals, LINKBANCORP sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Guaranty and LINKBANCORP

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

The idea behind First Guaranty Bancshares and LINKBANCORP 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.