Correlation Between Peoples Bancorp and First Resource

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

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

Diversification Opportunities for Peoples Bancorp and First Resource

0.24

Correlation Coefficient

Peoples Bancorp  First Resource

Modest diversification

The 3 months correlation between Peoples and First is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Bancorp and First Resource Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Resource Bank and Peoples Bancorp 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 Peoples Bancorp are associated (or correlated) with First Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Resource Bank has no effect on the direction of Peoples Bancorp i.e., Peoples Bancorp and First Resource go up and down completely randomly.

Pair Corralation between Peoples Bancorp and First Resource

Given the investment horizon of 90 days Peoples Bancorp is expected to under-perform the First Resource. In addition to that, Peoples Bancorp is 1.52 times more volatile than First Resource Bank. It trades about -0.25 of its total potential returns per unit of risk. First Resource Bank is currently generating about -0.26 per unit of volatility. If you would invest  1,622  in First Resource Bank on October 17, 2024 and sell it today you would lose (107.00) from holding First Resource Bank or give up 6.6% of portfolio value over 90 days.

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

Peoples Bancorp  vs.  First Resource Bank

Peoples Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

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

First Resource Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Resource Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, First Resource is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Peoples Bancorp and First Resource

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

The idea behind Peoples Bancorp and First Resource Bank 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.