Correlation Between Infosys and First Bancorp

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

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

Diversification Opportunities for Infosys and First Bancorp

0.17

Correlation Coefficient

Infosys  First Bancorp

Average diversification

The 3 months correlation between Infosys and First is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp and Infosys 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 Infosys Ltd ADR are associated (or correlated) with First Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancorp has no effect on the direction of Infosys i.e., Infosys and First Bancorp go up and down completely randomly.

Pair Corralation between Infosys and First Bancorp

Given the investment horizon of 90 days Infosys Ltd ADR is expected to under-perform the First Bancorp. In addition to that, Infosys is 1.0 times more volatile than First Bancorp. It trades about -0.14 of its total potential returns per unit of risk. First Bancorp is currently generating about 0.0 per unit of volatility. If you would invest  2,074  in First Bancorp on May 13, 2025 and sell it today you would lose (7.00) from holding First Bancorp or give up 0.34% of portfolio value over 90 days.

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

Infosys Ltd ADR  vs.  First Bancorp

Infosys Ltd ADR

Risk-Adjusted Performance

Weakest

Over the last 90 days Infosys Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

First Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days First Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, First Bancorp 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 Infosys and First Bancorp

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

The idea behind Infosys Ltd ADR and First 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.