Correlation Between Independent Bank and First Bancshares,

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

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

Diversification Opportunities for Independent Bank and First Bancshares,

0.94

Correlation Coefficient

Independent Bank  First Bancshares,

Almost no diversification

The 3 months correlation between Independent and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Independent Bank and The First Bancshares, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancshares, and Independent Bank 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 Independent Bank 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 Independent Bank i.e., Independent Bank and First Bancshares, go up and down completely randomly.

Pair Corralation between Independent Bank and First Bancshares,

Given the investment horizon of 90 days Independent Bank is expected to generate 1.06 times more return on investment than First Bancshares,. However, Independent Bank is 1.06 times more volatile than The First Bancshares,. It trades about 0.11 of its potential returns per unit of risk. The First Bancshares, is currently generating about 0.07 per unit of risk. If you would invest  6,269  in Independent Bank on August 30, 2024 and sell it today you would earn a total of  1,067  from holding Independent Bank or generate 17.02% return on investment over 90 days.

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

Independent Bank  vs.  The First Bancshares,

Independent Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Independent Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Independent Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

First Bancshares,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The First Bancshares, are ranked lower than 5 (%) 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 December 2024.

Pair Trading with Independent Bank and First Bancshares,

The main advantage of trading using opposite Independent Bank and First Bancshares, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Independent Bank 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,'s long position.

The idea behind Independent Bank and The 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.