Correlation Between Affinity Bancshares and FB Financial
Can any of the company-specific risk be diversified away by investing in both Affinity Bancshares and FB 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 Affinity Bancshares and FB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affinity Bancshares and FB Financial Corp, you can compare the effects of market volatilities on Affinity Bancshares and FB 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 Affinity Bancshares with a short position of FB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affinity Bancshares and FB Financial.
Diversification Opportunities for Affinity Bancshares and FB Financial
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Affinity and FBK is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and FB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FB Financial Corp and Affinity Bancshares 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 Affinity Bancshares are associated (or correlated) with FB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FB Financial Corp has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and FB Financial go up and down completely randomly.
Pair Corralation between Affinity Bancshares and FB Financial
Given the investment horizon of 90 days Affinity Bancshares is expected to generate 11.7 times less return on investment than FB Financial. But when comparing it to its historical volatility, Affinity Bancshares is 4.56 times less risky than FB Financial. It trades about 0.08 of its potential returns per unit of risk. FB Financial Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,903 in FB Financial Corp on September 1, 2024 and sell it today you would earn a total of 742.00 from holding FB Financial Corp or generate 15.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affinity Bancshares vs. FB Financial Corp
Performance |
| Timeline |
| Affinity Bancshares |
| FB Financial Corp |
Affinity Bancshares and FB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affinity Bancshares and FB Financial
The main advantage of trading using opposite Affinity Bancshares and FB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affinity Bancshares position performs unexpectedly, FB 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 FB Financial will offset losses from the drop in FB Financial's long position.| Affinity Bancshares vs. Home Federal Bancorp | Affinity Bancshares vs. Magyar Bancorp | Affinity Bancshares vs. Community West Bancshares |
| FB Financial vs. Affinity Bancshares | FB Financial vs. Southern California Bancorp | FB Financial vs. Auburn National Bancorporation | FB Financial vs. BayCom Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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