Correlation Between First Community and First Savings

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

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

Diversification Opportunities for First Community and First Savings

0.22

Correlation Coefficient

First Community  First Savings

Modest diversification

The 3 months correlation between First and First is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding First Community and First Savings Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Savings Financial and First Community 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 Community are associated (or correlated) with First Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Savings Financial has no effect on the direction of First Community i.e., First Community and First Savings go up and down completely randomly.

Pair Corralation between First Community and First Savings

Given the investment horizon of 90 days First Community is expected to generate 0.94 times more return on investment than First Savings. However, First Community is 1.06 times less risky than First Savings. It trades about 0.06 of its potential returns per unit of risk. First Savings Financial is currently generating about -0.09 per unit of risk. If you would invest  2,394  in First Community on May 12, 2025 and sell it today you would earn a total of  101.00  from holding First Community or generate 4.22% return on investment over 90 days.

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

First Community  vs.  First Savings Financial

First Community

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in First Community are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, First Community is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

First Savings Financial

Risk-Adjusted Performance

Weakest

Over the last 90 days First Savings Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with First Community and First Savings

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

The idea behind First Community and First Savings 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.