Correlation Between Bank First and First Bancorp

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

Diversification Opportunities for Bank First and First Bancorp

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Bank First and First is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank First National and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp and Bank First 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 Bank First National 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 Bank First i.e., Bank First and First Bancorp go up and down completely randomly.

Pair Corralation between Bank First and First Bancorp

Considering the 90-day investment horizon Bank First National is expected to generate 0.82 times more return on investment than First Bancorp. However, Bank First National is 1.22 times less risky than First Bancorp. It trades about 0.06 of its potential returns per unit of risk. First Bancorp is currently generating about -0.03 per unit of risk. If you would invest  7,127  in Bank First National on April 4, 2022 and sell it today you would earn a total of  545.00  from holding Bank First National or generate 7.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Bank First National  vs.  First Bancorp

 Performance (%) 
      Timeline 
Bank First National 
Bank First Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bank First National are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Bank First may actually be approaching a critical reversion point that can send shares even higher in August 2022.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0115
Payout Ratio
0.2
Last Split Factor
2:1
Forward Annual Dividend Rate
0.88
Dividend Date
2022-07-06
Ex Dividend Date
2022-06-21
Last Split Date
2002-10-21

Bank First Price Channel

First Bancorp 
First Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in First Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, First Bancorp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0422
Payout Ratio
0.38
Last Split Factor
3:1
Forward Annual Dividend Rate
1.28
Dividend Date
2022-04-22
Ex Dividend Date
2022-04-08
Last Split Date
2004-06-02

First Price Channel

Bank First and First Bancorp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Bank First and First Bancorp

The main advantage of trading using opposite Bank First and First Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank First 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 Bank First National 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.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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