Correlation Between First Trust and Croghan Bancshares

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

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

Diversification Opportunities for First Trust and Croghan Bancshares

0.48

Correlation Coefficient

First Trust  Croghan Bancshares

Very weak diversification

The 3 months correlation between First and Croghan is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding First Trust High and Croghan Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Croghan Bancshares and First Trust 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 Trust High are associated (or correlated) with Croghan Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Croghan Bancshares has no effect on the direction of First Trust i.e., First Trust and Croghan Bancshares go up and down completely randomly.

Pair Corralation between First Trust and Croghan Bancshares

Given the investment horizon of 90 days First Trust High is expected to generate 0.45 times more return on investment than Croghan Bancshares. However, First Trust High is 2.2 times less risky than Croghan Bancshares. It trades about 0.15 of its potential returns per unit of risk. Croghan Bancshares is currently generating about 0.02 per unit of risk. If you would invest  1,379  in First Trust High on May 4, 2025 and sell it today you would earn a total of  72.00  from holding First Trust High or generate 5.22% return on investment over 90 days.

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

First Trust High  vs.  Croghan Bancshares

First Trust High

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust High are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, First Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Croghan Bancshares

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Croghan Bancshares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Croghan Bancshares is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with First Trust and Croghan Bancshares

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

The idea behind First Trust High and Croghan Bancshares 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.