Correlation Between First Bankers and National Capital

Can any of the company-specific risk be diversified away by investing in both First Bankers and National Capital 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 National Capital 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 National Capital Bank, you can compare the effects of market volatilities on First Bankers and National Capital 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 National Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bankers and National Capital.

Diversification Opportunities for First Bankers and National Capital

-0.38

Correlation Coefficient

First Bankers  National Capital

Very good diversification

The 3 months correlation between First and National is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding First Bankers Trustshares and National Capital Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Capital Bank 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 National Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Capital Bank has no effect on the direction of First Bankers i.e., First Bankers and National Capital go up and down completely randomly.

Pair Corralation between First Bankers and National Capital

Given the investment horizon of 90 days First Bankers Trustshares is expected to generate 0.29 times more return on investment than National Capital. However, First Bankers Trustshares is 3.43 times less risky than National Capital. It trades about 0.03 of its potential returns per unit of risk. National Capital Bank is currently generating about -0.04 per unit of risk. If you would invest  1,633  in First Bankers Trustshares on May 4, 2025 and sell it today you would earn a total of  17.00  from holding First Bankers Trustshares or generate 1.04% return on investment over 90 days.

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

First Bankers Trustshares  vs.  National Capital Bank

First Bankers Trustshares

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Bankers Trustshares are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

National Capital Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Capital Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, National Capital 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 National Capital

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

The idea behind First Bankers Trustshares and National Capital Bank 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.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.