Correlation Between 1ST SUMMIT and CreditRiskMonitor

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

By analyzing existing cross correlation between 1ST SUMMIT BANCORP and CreditRiskMonitorCom, you can compare the effects of market volatilities on 1ST SUMMIT and CreditRiskMonitor 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 SUMMIT with a short position of CreditRiskMonitor. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1ST SUMMIT and CreditRiskMonitor.

Diversification Opportunities for 1ST SUMMIT and CreditRiskMonitor

-0.41

Correlation Coefficient

1ST SUMMIT  CreditRiskMonitor

Very good diversification

The 3 months correlation between 1ST and CreditRiskMonitor is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding 1ST SUMMIT BANCORP and CreditRiskMonitorCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CreditRiskMonitorCom and 1ST SUMMIT 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 SUMMIT BANCORP are associated (or correlated) with CreditRiskMonitor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CreditRiskMonitorCom has no effect on the direction of 1ST SUMMIT i.e., 1ST SUMMIT and CreditRiskMonitor go up and down completely randomly.

Pair Corralation between 1ST SUMMIT and CreditRiskMonitor

Given the investment horizon of 90 days 1ST SUMMIT BANCORP is expected to under-perform the CreditRiskMonitor. But the pink sheet apears to be less risky and, when comparing its historical volatility, 1ST SUMMIT BANCORP is 1.65 times less risky than CreditRiskMonitor. The pink sheet trades about -0.03 of its potential returns per unit of risk. The CreditRiskMonitorCom is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  250.00  in CreditRiskMonitorCom on October 22, 2024 and sell it today you would earn a total of  50.00  from holding CreditRiskMonitorCom or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

1ST SUMMIT BANCORP  vs.  CreditRiskMonitorCom

1ST SUMMIT BANCORP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1ST SUMMIT BANCORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, 1ST SUMMIT is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

CreditRiskMonitorCom

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CreditRiskMonitorCom are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile primary indicators, CreditRiskMonitor showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 1ST SUMMIT and CreditRiskMonitor

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

The idea behind 1ST SUMMIT BANCORP and CreditRiskMonitorCom 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.