Correlation Between 1st Capital and UNB Corp

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Can any of the company-specific risk be diversified away by investing in both 1st Capital and UNB Corp 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 1st Capital and UNB Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1st Capital Bank and UNB Corp, you can compare the effects of market volatilities on 1st Capital and UNB Corp 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 1st Capital with a short position of UNB Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Capital and UNB Corp.

Diversification Opportunities for 1st Capital and UNB Corp

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between 1st and UNB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding 1st Capital Bank and UNB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNB Corp and 1st Capital 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 1st Capital Bank are associated (or correlated) with UNB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNB Corp has no effect on the direction of 1st Capital i.e., 1st Capital and UNB Corp go up and down completely randomly.

Pair Corralation between 1st Capital and UNB Corp

If you would invest  1,035  in 1st Capital Bank on December 29, 2023 and sell it today you would earn a total of  80.00  from holding 1st Capital Bank or generate 7.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

1st Capital Bank  vs.  UNB Corp

 Performance 
       Timeline  
1st Capital Bank 

Risk-Adjusted Performance

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Over the last 90 days 1st Capital Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
UNB Corp 

Risk-Adjusted Performance

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Over the last 90 days UNB Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UNB Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

1st Capital and UNB Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 1st Capital and UNB Corp

The main advantage of trading using opposite 1st Capital and UNB Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Capital position performs unexpectedly, UNB Corp 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 UNB Corp will offset losses from the drop in UNB Corp's long position.
The idea behind 1st Capital Bank and UNB Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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