Correlation Between Pure Storage and First Bancshares

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

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

Diversification Opportunities for Pure Storage and First Bancshares

0.78

Correlation Coefficient

Pure Storage  First Bancshares

Poor diversification

The 3 months correlation between Pure and First is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and First Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancshares and Pure Storage 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 Pure Storage are associated (or correlated) with First Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancshares has no effect on the direction of Pure Storage i.e., Pure Storage and First Bancshares go up and down completely randomly.

Pair Corralation between Pure Storage and First Bancshares

Given the investment horizon of 90 days Pure Storage is expected to generate 3.74 times more return on investment than First Bancshares. However, Pure Storage is 3.74 times more volatile than First Bancshares. It trades about 0.17 of its potential returns per unit of risk. First Bancshares is currently generating about 0.06 per unit of risk. If you would invest  5,734  in Pure Storage on August 10, 2025 and sell it today you would earn a total of  3,273  from holding Pure Storage or generate 57.08% return on investment over 90 days.

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

Pure Storage  vs.  First Bancshares

Pure Storage

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Storage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Pure Storage reported solid returns over the last few months and may actually be approaching a breakup point.

First Bancshares

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in First Bancshares are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, First Bancshares is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Pure Storage and First Bancshares

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

The idea behind Pure Storage and First 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.