Correlation Between First Savings and First Community

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

Diversification Opportunities for First Savings and First Community

0.42

Correlation Coefficient

First Savings  First Community

Very weak diversification

The 3 months correlation between First and First is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding First Savings Financial and First Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community and First Savings 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 Savings Financial 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 has no effect on the direction of First Savings i.e., First Savings and First Community go up and down completely randomly.

Pair Corralation between First Savings and First Community

Given the investment horizon of 90 days First Savings Financial is expected to under-perform the First Community. In addition to that, First Savings is 1.18 times more volatile than First Community. It trades about -0.01 of its total potential returns per unit of risk. First Community is currently generating about 0.13 per unit of volatility. If you would invest  2,367  in First Community on May 17, 2025 and sell it today you would earn a total of  247.00  from holding First Community or generate 10.44% return on investment over 90 days.

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

First Savings Financial  vs.  First Community

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 nearly stable technical and fundamental indicators, First Savings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

First Community

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First Community are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, First Community may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with First Savings and First Community

The main advantage of trading using opposite First Savings and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Savings 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 Savings Financial and First Community 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.