Correlation Between First Capital and Washington Trust

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

By analyzing existing cross correlation between First Capital and Washington Trust Bancorp, you can compare the effects of market volatilities on First Capital and Washington Trust 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 Washington Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and Washington Trust.

Diversification Opportunities for First Capital and Washington Trust

-0.16

Correlation Coefficient

First Capital  Washington Trust

Good diversification

The 3 months correlation between First and Washington is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and Washington Trust Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Trust 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 Washington Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Trust Bancorp has no effect on the direction of First Capital i.e., First Capital and Washington Trust go up and down completely randomly.

Pair Corralation between First Capital and Washington Trust

Given the investment horizon of 90 days First Capital is expected to under-perform the Washington Trust. In addition to that, First Capital is 1.6 times more volatile than Washington Trust Bancorp. It trades about -0.17 of its total potential returns per unit of risk. Washington Trust Bancorp is currently generating about -0.03 per unit of volatility. If you would invest  2,805  in Washington Trust Bancorp on May 2, 2025 and sell it today you would lose (113.00) from holding Washington Trust Bancorp or give up 4.03% of portfolio value over 90 days.

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

First Capital  vs.  Washington Trust Bancorp

First Capital

Risk-Adjusted Performance

Very Weak

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

Washington Trust Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Washington Trust Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Washington Trust is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with First Capital and Washington Trust

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

The idea behind First Capital and Washington Trust Bancorp 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.