Correlation Between Prime Meridian and Communities First

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

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

Diversification Opportunities for Prime Meridian and Communities First

0.2

Correlation Coefficient

Prime Meridian  Communities First

Modest diversification

The 3 months correlation between Prime and Communities is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Prime Meridian Holding and Communities First Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Communities First and Prime Meridian 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 Prime Meridian Holding are associated (or correlated) with Communities First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Communities First has no effect on the direction of Prime Meridian i.e., Prime Meridian and Communities First go up and down completely randomly.

Pair Corralation between Prime Meridian and Communities First

If you would invest  2,235  in Prime Meridian Holding on September 2, 2024 and sell it today you would earn a total of  665.00  from holding Prime Meridian Holding or generate 29.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.79%
Values	Daily Returns

Prime Meridian Holding  vs.  Communities First Financial

Prime Meridian Holding

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prime Meridian Holding are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Prime Meridian reported solid returns over the last few months and may actually be approaching a breakup point.

Communities First

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Communities First Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Communities First 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 Prime Meridian and Communities First

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

The idea behind Prime Meridian Holding and Communities First Financial 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.