Correlation Between First Bankers and First Ottawa

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

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

Diversification Opportunities for First Bankers and First Ottawa

0.53

Correlation Coefficient

First Bankers  First Ottawa

Very weak diversification

The 3 months correlation between First and First is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding First Bankers Trustshares and First Ottawa Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Ottawa Bancshares and First Bankers 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 Bankers Trustshares are associated (or correlated) with First Ottawa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Ottawa Bancshares has no effect on the direction of First Bankers i.e., First Bankers and First Ottawa go up and down completely randomly.

Pair Corralation between First Bankers and First Ottawa

Given the investment horizon of 90 days First Bankers is expected to generate 6.46 times less return on investment than First Ottawa. But when comparing it to its historical volatility, First Bankers Trustshares is 1.54 times less risky than First Ottawa. It trades about 0.01 of its potential returns per unit of risk. First Ottawa Bancshares is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  14,300  in First Ottawa Bancshares on May 16, 2025 and sell it today you would earn a total of  350.00  from holding First Ottawa Bancshares or generate 2.45% return on investment over 90 days.

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

First Bankers Trustshares  vs.  First Ottawa Bancshares

First Bankers Trustshares

Risk-Adjusted Performance

Weakest

Over the last 90 days First Bankers Trustshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, First Bankers is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

First Ottawa Bancshares

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in First Ottawa Bancshares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, First Ottawa is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Bankers and First Ottawa

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

The idea behind First Bankers Trustshares and First Ottawa Bancshares 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..