Correlation Between First Community and First Community

Can any of the company-specific risk be diversified away by investing in both First Community 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 First Community and First Community 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 Community Financial, you can compare the effects of market volatilities on First Community 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 First Community with a short position of First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and First Community.

Diversification Opportunities for First Community and First Community

0.94

Correlation Coefficient

First Community  First Community

Almost no diversification

The 3 months correlation between First and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding First Community 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 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 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 First Community i.e., First Community and First Community go up and down completely randomly.

Pair Corralation between First Community and First Community

Given the investment horizon of 90 days First Community is expected to generate 1.02 times less return on investment than First Community. But when comparing it to its historical volatility, First Community is 1.49 times less risky than First Community. It trades about 0.11 of its potential returns per unit of risk. First Community Financial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  946.00  in First Community Financial on May 14, 2025 and sell it today you would earn a total of  49.00  from holding First Community Financial or generate 5.18% return on investment over 90 days.

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

First Community  vs.  First Community Financial

First Community

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First Community are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, First Community is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

First Community Financial

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in First Community Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, First Community is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with First Community and First Community

The main advantage of trading using opposite First Community and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community 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 First Community 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.