Correlation Between Crawford and First Bancorp

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

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

Diversification Opportunities for Crawford and First Bancorp

-0.04

Correlation Coefficient

Crawford  First Bancorp

Good diversification

The 3 months correlation between Crawford and First is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Crawford Company and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp and Crawford 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 Crawford Company are associated (or correlated) with First Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancorp has no effect on the direction of Crawford i.e., Crawford and First Bancorp go up and down completely randomly.

Pair Corralation between Crawford and First Bancorp

Assuming the 90 days horizon Crawford Company is expected to generate 1.88 times more return on investment than First Bancorp. However, Crawford is 1.88 times more volatile than First Bancorp. It trades about 0.07 of its potential returns per unit of risk. First Bancorp is currently generating about 0.11 per unit of risk. If you would invest  862.00  in Crawford Company on February 23, 2024 and sell it today you would earn a total of  62.00  from holding Crawford Company or generate 7.19% return on investment over 90 days.

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

Crawford Company  vs.  First Bancorp

Crawford

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crawford Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

First Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, First Bancorp may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Crawford and First Bancorp

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

The idea behind Crawford Company and First Bancorp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.