Correlation Between 1st Capital and Equitable Financial

Can any of the company-specific risk be diversified away by investing in both 1st Capital and Equitable 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 1st Capital and Equitable Financial 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 Equitable Financial Corp, you can compare the effects of market volatilities on 1st Capital and Equitable 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 1st Capital with a short position of Equitable Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Capital and Equitable Financial.

Diversification Opportunities for 1st Capital and Equitable Financial

0.0

Correlation Coefficient

1st Capital  Equitable Financial

Pay attention - limited upside

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

Pair Corralation between 1st Capital and Equitable Financial

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

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

1st Capital Bank  vs.  Equitable Financial Corp

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.

Equitable Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equitable Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Equitable Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with 1st Capital and Equitable Financial

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

The idea behind 1st Capital Bank and Equitable Financial 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.