Correlation Between Texas Community and First IC

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

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

Diversification Opportunities for Texas Community and First IC

0.19

Correlation Coefficient

Texas Community  First IC

Average diversification

The 3 months correlation between Texas and First is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Texas Community Bancshares and First IC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First IC and Texas Community 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 Texas Community Bancshares are associated (or correlated) with First IC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First IC has no effect on the direction of Texas Community i.e., Texas Community and First IC go up and down completely randomly.

Pair Corralation between Texas Community and First IC

Given the investment horizon of 90 days Texas Community is expected to generate 2.59 times less return on investment than First IC. But when comparing it to its historical volatility, Texas Community Bancshares is 2.0 times less risky than First IC. It trades about 0.13 of its potential returns per unit of risk. First IC is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  900.00  in First IC on September 12, 2024 and sell it today you would earn a total of  30.00  from holding First IC or generate 3.33% return on investment over 90 days.

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

Texas Community Bancshares  vs.  First IC

Texas Community Banc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Community Bancshares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Texas Community is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

First IC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First IC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, First IC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Texas Community and First IC

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

The idea behind Texas Community Bancshares and First IC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.