Correlation Between First Capital and First Internet
Can any of the company-specific risk be diversified away by investing in both First Capital and First Internet 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 First Capital and First Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Capital and First Internet Bancorp, you can compare the effects of market volatilities on First Capital and First Internet 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 First Capital with a short position of First Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and First Internet.
Diversification Opportunities for First Capital and First Internet
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and First is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and First Internet Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Internet Bancorp and First Capital 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 First Capital are associated (or correlated) with First Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Internet Bancorp has no effect on the direction of First Capital i.e., First Capital and First Internet go up and down completely randomly.
Pair Corralation between First Capital and First Internet
Given the investment horizon of 90 days First Capital is expected to generate 5.07 times less return on investment than First Internet. But when comparing it to its historical volatility, First Capital is 1.56 times less risky than First Internet. It trades about 0.0 of its potential returns per unit of risk. First Internet Bancorp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,803 in First Internet Bancorp on February 6, 2024 and sell it today you would lose (585.00) from holding First Internet Bancorp or give up 15.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.39% |
Values | Daily Returns |
First Capital vs. First Internet Bancorp
Performance |
Timeline |
First Capital |
First Internet Bancorp |
First Capital and First Internet Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Capital and First Internet
The main advantage of trading using opposite First Capital and First Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, First Internet 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 Internet will offset losses from the drop in First Internet's long position.First Capital vs. Finward Bancorp | First Capital vs. Northfield Bancorp | First Capital vs. LINKBANCORP | First Capital vs. FNB Inc |
First Internet vs. Finward Bancorp | First Internet vs. Northfield Bancorp | First Internet vs. LINKBANCORP | First Internet vs. FNB Inc |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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