Correlation Between Stock Yards and First National

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

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

Diversification Opportunities for Stock Yards and First National

0.95

Correlation Coefficient

Stock Yards  First National

Almost no diversification

The 3 months correlation between Stock and First is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Stock Yards Bancorp and First National Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Corp and Stock Yards 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 Stock Yards Bancorp are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Corp has no effect on the direction of Stock Yards i.e., Stock Yards and First National go up and down completely randomly.

Pair Corralation between Stock Yards and First National

Given the investment horizon of 90 days Stock Yards is expected to generate 1.5 times less return on investment than First National. In addition to that, Stock Yards is 1.16 times more volatile than First National Corp. It trades about 0.19 of its total potential returns per unit of risk. First National Corp is currently generating about 0.33 per unit of volatility. If you would invest  1,717  in First National Corp on September 13, 2024 and sell it today you would earn a total of  851.00  from holding First National Corp or generate 49.56% return on investment over 90 days.

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

Stock Yards Bancorp  vs.  First National Corp

Stock Yards Bancorp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stock Yards Bancorp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental drivers, Stock Yards unveiled solid returns over the last few months and may actually be approaching a breakup point.

First National Corp

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in First National Corp are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, First National exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stock Yards and First National

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

The idea behind Stock Yards Bancorp and First National Corp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.