Correlation Between LINKBANCORP and First Bank

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

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

Diversification Opportunities for LINKBANCORP and First Bank

0.87

Correlation Coefficient

LINKBANCORP  First Bank

Very poor diversification

The 3 months correlation between LINKBANCORP and First is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding LINKBANCORP and First Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bank and LINKBANCORP 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 LINKBANCORP are associated (or correlated) with First Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bank has no effect on the direction of LINKBANCORP i.e., LINKBANCORP and First Bank go up and down completely randomly.

Pair Corralation between LINKBANCORP and First Bank

Given the investment horizon of 90 days LINKBANCORP is expected to under-perform the First Bank. In addition to that, LINKBANCORP is 1.32 times more volatile than First Bank. It trades about -0.05 of its total potential returns per unit of risk. First Bank is currently generating about 0.0 per unit of volatility. If you would invest  1,518  in First Bank on May 13, 2025 and sell it today you would lose (5.00) from holding First Bank or give up 0.33% of portfolio value over 90 days.

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

LINKBANCORP  vs.  First Bank

LINKBANCORP

Risk-Adjusted Performance

Weakest

Over the last 90 days LINKBANCORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, LINKBANCORP is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

First Bank

Risk-Adjusted Performance

Weak

Over the last 90 days First Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, First Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LINKBANCORP and First Bank

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

The idea behind LINKBANCORP and First Bank 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.