Correlation Between First Community and Ballston Spa

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

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

Diversification Opportunities for First Community and Ballston Spa

-0.89

Correlation Coefficient

First Community  Ballston Spa

Pay attention - limited upside

The 3 months correlation between First and Ballston is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding First Community Financial and Ballston Spa Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballston Spa Bancorp and First Community 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 Financial are associated (or correlated) with Ballston Spa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballston Spa Bancorp has no effect on the direction of First Community i.e., First Community and Ballston Spa go up and down completely randomly.

Pair Corralation between First Community and Ballston Spa

Given the investment horizon of 90 days First Community Financial is expected to under-perform the Ballston Spa. In addition to that, First Community is 2.48 times more volatile than Ballston Spa Bancorp. It trades about -0.07 of its total potential returns per unit of risk. Ballston Spa Bancorp is currently generating about 0.15 per unit of volatility. If you would invest  4,946  in Ballston Spa Bancorp on September 23, 2024 and sell it today you would earn a total of  780.00  from holding Ballston Spa Bancorp or generate 15.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	56.3%
Values	Daily Returns

First Community Financial  vs.  Ballston Spa Bancorp

First Community Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Community Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Ballston Spa Bancorp

Risk-Adjusted Performance

0 of 100

Good

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

Pair Trading with First Community and Ballston Spa

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

The idea behind First Community Financial and Ballston Spa 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.

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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.