Correlation Between First Internet and LCNB

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

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

Diversification Opportunities for First Internet and LCNB

0.63

Correlation Coefficient

First Internet  LCNB

Poor diversification

The 3 months correlation between First and LCNB is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding First Internet Bancorp and LCNB Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCNB and First Internet 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 Internet Bancorp are associated (or correlated) with LCNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LCNB has no effect on the direction of First Internet i.e., First Internet and LCNB go up and down completely randomly.

Pair Corralation between First Internet and LCNB

Given the investment horizon of 90 days First Internet Bancorp is expected to under-perform the LCNB. In addition to that, First Internet is 1.5 times more volatile than LCNB Corporation. It trades about -0.17 of its total potential returns per unit of risk. LCNB Corporation is currently generating about 0.02 per unit of volatility. If you would invest  1,500  in LCNB Corporation on August 1, 2025 and sell it today you would earn a total of  22.00  from holding LCNB Corporation or generate 1.47% return on investment over 90 days.

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

First Internet Bancorp  vs.  LCNB Corp.

First Internet Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days First Internet Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in November 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

LCNB

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in LCNB Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, LCNB may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with First Internet and LCNB

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

The idea behind First Internet Bancorp and LCNB Corporation 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.