Correlation Between Bondbloxx ETF and First Community

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

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

Diversification Opportunities for Bondbloxx ETF and First Community

0.45

Correlation Coefficient

Bondbloxx ETF  First Community

Very weak diversification

The 3 months correlation between Bondbloxx and First is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bondbloxx ETF Trust and First Community Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community Financial and Bondbloxx ETF 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 Bondbloxx ETF Trust 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 Financial has no effect on the direction of Bondbloxx ETF i.e., Bondbloxx ETF and First Community go up and down completely randomly.

Pair Corralation between Bondbloxx ETF and First Community

Given the investment horizon of 90 days Bondbloxx ETF is expected to generate 7.96 times less return on investment than First Community. But when comparing it to its historical volatility, Bondbloxx ETF Trust is 16.44 times less risky than First Community. It trades about 0.18 of its potential returns per unit of risk. First Community Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,175  in First Community Financial on September 21, 2024 and sell it today you would earn a total of  29.00  from holding First Community Financial or generate 2.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Bondbloxx ETF Trust  vs.  First Community Financial

Bondbloxx ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bondbloxx ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bondbloxx ETF is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

First Community Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Community Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Bondbloxx ETF and First Community

The main advantage of trading using opposite Bondbloxx ETF and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bondbloxx ETF 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 Bondbloxx ETF Trust and First Community 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.