Correlation Between First Commerce and Peoples Financial
Can any of the company-specific risk be diversified away by investing in both First Commerce and Peoples Financial 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 Commerce and Peoples Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Commerce Bank and Peoples Financial Corp, you can compare the effects of market volatilities on First Commerce and Peoples Financial 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 Commerce with a short position of Peoples Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Commerce and Peoples Financial.
Diversification Opportunities for First Commerce and Peoples Financial
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Peoples is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding First Commerce Bank and Peoples Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Financial Corp and First Commerce 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 First Commerce Bank are associated (or correlated) with Peoples Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Financial Corp has no effect on the direction of First Commerce i.e., First Commerce and Peoples Financial go up and down completely randomly.
Pair Corralation between First Commerce and Peoples Financial
Given the investment horizon of 90 days First Commerce Bank is expected to generate 1.64 times more return on investment than Peoples Financial. However, First Commerce is 1.64 times more volatile than Peoples Financial Corp. It trades about 0.08 of its potential returns per unit of risk. Peoples Financial Corp is currently generating about 0.05 per unit of risk. If you would invest 460.00 in First Commerce Bank on July 26, 2025 and sell it today you would earn a total of 30.00 from holding First Commerce Bank or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
First Commerce Bank vs. Peoples Financial Corp
Performance |
| Timeline |
| First Commerce Bank |
| Peoples Financial Corp |
First Commerce and Peoples Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Commerce and Peoples Financial
The main advantage of trading using opposite First Commerce and Peoples Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Commerce position performs unexpectedly, Peoples Financial 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 Peoples Financial will offset losses from the drop in Peoples Financial's long position.| First Commerce vs. Trinity Bank National | First Commerce vs. Bancorp 34 | First Commerce vs. American Bank | First Commerce vs. Dimeco Inc |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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