Correlation Between First Bancshares, and NowVertical

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

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

Diversification Opportunities for First Bancshares, and NowVertical

0.63

Correlation Coefficient

First Bancshares,  NowVertical

Poor diversification

The 3 months correlation between First and NowVertical is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding The First Bancshares, and NowVertical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NowVertical Group and First 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 The First Bancshares, are associated (or correlated) with NowVertical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NowVertical Group has no effect on the direction of First Bancshares, i.e., First Bancshares, and NowVertical go up and down completely randomly.

Pair Corralation between First Bancshares, and NowVertical

Given the investment horizon of 90 days The First Bancshares, is expected to under-perform the NowVertical. But the stock apears to be less risky and, when comparing its historical volatility, The First Bancshares, is 3.34 times less risky than NowVertical. The stock trades about -0.21 of its potential returns per unit of risk. The NowVertical Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  27.00  in NowVertical Group on September 27, 2024 and sell it today you would lose (1.00) from holding NowVertical Group or give up 3.7% of portfolio value over 90 days.

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

The First Bancshares,  vs.  NowVertical Group

First Bancshares,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The First Bancshares, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, First Bancshares, may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NowVertical Group

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with First Bancshares, and NowVertical

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

The idea behind The First Bancshares, and NowVertical Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.