Correlation Between WSFS Financial and First Financial

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

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

Diversification Opportunities for WSFS Financial and First Financial

0.95

Correlation Coefficient

WSFS Financial  First Financial

Almost no diversification

The 3 months correlation between WSFS and First is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding WSFS Financial and First Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Financial and WSFS Financial 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 WSFS Financial are associated (or correlated) with First Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Financial has no effect on the direction of WSFS Financial i.e., WSFS Financial and First Financial go up and down completely randomly.

Pair Corralation between WSFS Financial and First Financial

Given the investment horizon of 90 days WSFS Financial is expected to generate 1.21 times less return on investment than First Financial. But when comparing it to its historical volatility, WSFS Financial is 1.14 times less risky than First Financial. It trades about 0.22 of its potential returns per unit of risk. First Financial is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  4,345  in First Financial on April 20, 2025 and sell it today you would earn a total of  1,261  from holding First Financial or generate 29.02% return on investment over 90 days.

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

WSFS Financial  vs.  First Financial

WSFS Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WSFS Financial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, WSFS Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

First Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Financial are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, First Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WSFS Financial and First Financial

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

The idea behind WSFS Financial and First Financial 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.