Correlation Between Kentucky First and First Bancshares,

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

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

Diversification Opportunities for Kentucky First and First Bancshares,

0.78

Correlation Coefficient

Kentucky First  First Bancshares,

Poor diversification

The 3 months correlation between Kentucky and First is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Kentucky First Federal and The First Bancshares, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancshares, and Kentucky First 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 Kentucky First Federal are associated (or correlated) with First Bancshares,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancshares, has no effect on the direction of Kentucky First i.e., Kentucky First and First Bancshares, go up and down completely randomly.

Pair Corralation between Kentucky First and First Bancshares,

Given the investment horizon of 90 days Kentucky First Federal is expected to under-perform the First Bancshares,. In addition to that, Kentucky First is 1.86 times more volatile than The First Bancshares,. It trades about 0.0 of its total potential returns per unit of risk. The First Bancshares, is currently generating about 0.02 per unit of volatility. If you would invest  3,478  in The First Bancshares, on December 29, 2024 and sell it today you would earn a total of  27.00  from holding The First Bancshares, or generate 0.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Kentucky First Federal  vs.  The First Bancshares,

Kentucky First Federal

Risk-Adjusted Performance

Very Weak

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

First Bancshares,

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The First Bancshares, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, First Bancshares, is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kentucky First and First Bancshares,

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

The idea behind Kentucky First Federal and The First Bancshares, 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.