Correlation Between First Commonwealth and OFG Bancorp

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

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

Diversification Opportunities for First Commonwealth and OFG Bancorp

0.91

Correlation Coefficient

First Commonwealth  OFG Bancorp

Almost no diversification

The 3 months correlation between First and OFG is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding First Commonwealth Financial and OFG Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFG Bancorp and First Commonwealth 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 Commonwealth Financial are associated (or correlated) with OFG Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFG Bancorp has no effect on the direction of First Commonwealth i.e., First Commonwealth and OFG Bancorp go up and down completely randomly.

Pair Corralation between First Commonwealth and OFG Bancorp

Considering the 90-day investment horizon First Commonwealth Financial is expected to generate 1.03 times more return on investment than OFG Bancorp. However, First Commonwealth is 1.03 times more volatile than OFG Bancorp. It trades about -0.07 of its potential returns per unit of risk. OFG Bancorp is currently generating about -0.12 per unit of risk. If you would invest  1,753  in First Commonwealth Financial on August 26, 2025 and sell it today you would lose (142.00) from holding First Commonwealth Financial or give up 8.1% of portfolio value over 90 days.

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

First Commonwealth Financial  vs.  OFG Bancorp

First Commonwealth

Risk-Adjusted Performance

Weakest

Over the last 90 days First Commonwealth Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

OFG Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days OFG Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with First Commonwealth and OFG Bancorp

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

The idea behind First Commonwealth Financial and OFG 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.