Correlation Between ServisFirst Bancshares and First Foundation

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

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

Diversification Opportunities for ServisFirst Bancshares and First Foundation

0.7

Correlation Coefficient

ServisFirst Bancshares  First Foundation

Poor diversification

The 3 months correlation between ServisFirst and First is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ServisFirst Bancshares and First Foundation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Foundation and ServisFirst Bancshares 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 ServisFirst Bancshares are associated (or correlated) with First Foundation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Foundation has no effect on the direction of ServisFirst Bancshares i.e., ServisFirst Bancshares and First Foundation go up and down completely randomly.

Pair Corralation between ServisFirst Bancshares and First Foundation

Given the investment horizon of 90 days ServisFirst Bancshares is expected to generate 4.95 times less return on investment than First Foundation. But when comparing it to its historical volatility, ServisFirst Bancshares is 1.21 times less risky than First Foundation. It trades about 0.02 of its potential returns per unit of risk. First Foundation is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  496.00  in First Foundation on June 2, 2025 and sell it today you would earn a total of  99.00  from holding First Foundation or generate 19.96% return on investment over 90 days.

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

ServisFirst Bancshares  vs.  First Foundation

ServisFirst Bancshares

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ServisFirst Bancshares are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, ServisFirst Bancshares unveiled solid returns over the last few months and may actually be approaching a breakup point.

First Foundation

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First Foundation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, First Foundation displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ServisFirst Bancshares and First Foundation

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

The idea behind ServisFirst Bancshares and First Foundation 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.