Correlation Between Bankwell Financial and BankFinancial
Can any of the company-specific risk be diversified away by investing in both Bankwell Financial and BankFinancial 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 Bankwell Financial and BankFinancial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bankwell Financial Group and BankFinancial, you can compare the effects of market volatilities on Bankwell Financial and BankFinancial 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 Bankwell Financial with a short position of BankFinancial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankwell Financial and BankFinancial.
Diversification Opportunities for Bankwell Financial and BankFinancial
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bankwell and BankFinancial is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bankwell Financial Group and BankFinancial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankFinancial and Bankwell Financial 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 Bankwell Financial Group are associated (or correlated) with BankFinancial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankFinancial has no effect on the direction of Bankwell Financial i.e., Bankwell Financial and BankFinancial go up and down completely randomly.
Pair Corralation between Bankwell Financial and BankFinancial
Given the investment horizon of 90 days Bankwell Financial is expected to generate 2.53 times less return on investment than BankFinancial. In addition to that, Bankwell Financial is 1.25 times more volatile than BankFinancial. It trades about 0.02 of its total potential returns per unit of risk. BankFinancial is currently generating about 0.05 per unit of volatility. If you would invest 957.00 in BankFinancial on November 2, 2024 and sell it today you would earn a total of 385.00 from holding BankFinancial or generate 40.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bankwell Financial Group vs. BankFinancial
Performance |
| Timeline |
| Bankwell Financial |
| BankFinancial |
Bankwell Financial and BankFinancial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bankwell Financial and BankFinancial
The main advantage of trading using opposite Bankwell Financial and BankFinancial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankwell Financial position performs unexpectedly, BankFinancial 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 BankFinancial will offset losses from the drop in BankFinancial's long position.| Bankwell Financial vs. Franklin Financial Services | Bankwell Financial vs. The First Bancshares, | Bankwell Financial vs. Home Federal Bancorp | Bankwell Financial vs. Lake Shore Bancorp |
| BankFinancial vs. First Business Financial | BankFinancial vs. Old Point Financial | BankFinancial vs. Parke Bancorp | BankFinancial vs. Community West Bancshares |
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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