Correlation Between Benchmark Bankshares and First Community

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

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

Diversification Opportunities for Benchmark Bankshares and First Community

0.43

Correlation Coefficient

Benchmark Bankshares  First Community

Very weak diversification

The 3 months correlation between Benchmark and First is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Bankshares 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 Benchmark Bankshares 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 Benchmark Bankshares 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 Benchmark Bankshares i.e., Benchmark Bankshares and First Community go up and down completely randomly.

Pair Corralation between Benchmark Bankshares and First Community

Given the investment horizon of 90 days Benchmark Bankshares is expected to generate 1.2 times more return on investment than First Community. However, Benchmark Bankshares is 1.2 times more volatile than First Community Financial. It trades about 0.16 of its potential returns per unit of risk. First Community Financial is currently generating about 0.12 per unit of risk. If you would invest  2,700  in Benchmark Bankshares on May 19, 2025 and sell it today you would earn a total of  399.00  from holding Benchmark Bankshares or generate 14.78% return on investment over 90 days.

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

Benchmark Bankshares  vs.  First Community Financial

Benchmark Bankshares

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Benchmark Bankshares are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, Benchmark Bankshares displayed solid returns over the last few months and may actually be approaching a breakup point.

First Community Financial

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First Community Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, First Community may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Benchmark Bankshares and First Community

The main advantage of trading using opposite Benchmark Bankshares and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Bankshares 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 Benchmark Bankshares 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.