Correlation Between 1st Capital and Southern California

Can any of the company-specific risk be diversified away by investing in both 1st Capital and Southern California 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 1st Capital and Southern California into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1st Capital Bank and Southern California Bancorp, you can compare the effects of market volatilities on 1st Capital and Southern California 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 1st Capital with a short position of Southern California. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Capital and Southern California.

Diversification Opportunities for 1st Capital and Southern California

0.0

Correlation Coefficient

1st Capital  Southern California

Pay attention - limited upside

The 3 months correlation between 1st and Southern is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding 1st Capital Bank and Southern California Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern California and 1st 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 1st Capital Bank are associated (or correlated) with Southern California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern California has no effect on the direction of 1st Capital i.e., 1st Capital and Southern California go up and down completely randomly.

Pair Corralation between 1st Capital and Southern California

If you would invest (100.00) in 1st Capital Bank on December 28, 2024 and sell it today you would earn a total of  100.00  from holding 1st Capital Bank or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

1st Capital Bank  vs.  Southern California Bancorp

1st Capital Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days 1st Capital Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 1st Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Southern California

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southern California Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with 1st Capital and Southern California

The main advantage of trading using opposite 1st Capital and Southern California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Capital position performs unexpectedly, Southern California 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 Southern California will offset losses from the drop in Southern California's long position.

The idea behind 1st Capital Bank and Southern California 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.