Correlation Between Guaranty Bancshares, and First Community

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

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

Diversification Opportunities for Guaranty Bancshares, and First Community

0.81

Correlation Coefficient

Guaranty Bancshares,  First Community

Very poor diversification

The 3 months correlation between Guaranty and First is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Guaranty Bancshares, and First Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community and Guaranty Bancshares, 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 Guaranty Bancshares, are associated (or correlated) with First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community has no effect on the direction of Guaranty Bancshares, i.e., Guaranty Bancshares, and First Community go up and down completely randomly.

Pair Corralation between Guaranty Bancshares, and First Community

Given the investment horizon of 90 days Guaranty Bancshares, is expected to generate 1.74 times less return on investment than First Community. In addition to that, Guaranty Bancshares, is 1.03 times more volatile than First Community. It trades about 0.09 of its total potential returns per unit of risk. First Community is currently generating about 0.16 per unit of volatility. If you would invest  1,684  in First Community on September 19, 2024 and sell it today you would earn a total of  920.00  from holding First Community or generate 54.63% return on investment over 90 days.

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

Guaranty Bancshares,  vs.  First Community

Guaranty Bancshares,

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guaranty Bancshares, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Guaranty Bancshares, is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

First Community

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Community are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, First Community displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guaranty Bancshares, and First Community

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

The idea behind Guaranty Bancshares, and First Community 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.