Correlation Between Bankwell Financial and ECB Bancorp
Can any of the company-specific risk be diversified away by investing in both Bankwell Financial and ECB 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 Bankwell Financial and ECB Bancorp 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 ECB Bancorp, you can compare the effects of market volatilities on Bankwell Financial and ECB 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 Bankwell Financial with a short position of ECB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankwell Financial and ECB Bancorp.
Diversification Opportunities for Bankwell Financial and ECB Bancorp
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bankwell and ECB is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bankwell Financial Group and ECB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECB Bancorp 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 ECB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECB Bancorp has no effect on the direction of Bankwell Financial i.e., Bankwell Financial and ECB Bancorp go up and down completely randomly.
Pair Corralation between Bankwell Financial and ECB Bancorp
Given the investment horizon of 90 days Bankwell Financial Group is expected to generate 2.5 times more return on investment than ECB Bancorp. However, Bankwell Financial is 2.5 times more volatile than ECB Bancorp. It trades about 0.11 of its potential returns per unit of risk. ECB Bancorp is currently generating about 0.1 per unit of risk. If you would invest 2,965 in Bankwell Financial Group on August 25, 2024 and sell it today you would earn a total of 355.00 from holding Bankwell Financial Group or generate 11.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bankwell Financial Group vs. ECB Bancorp
Performance |
| Timeline |
| Bankwell Financial |
| ECB Bancorp |
Bankwell Financial and ECB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bankwell Financial and ECB Bancorp
The main advantage of trading using opposite Bankwell Financial and ECB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankwell Financial position performs unexpectedly, ECB 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 ECB Bancorp will offset losses from the drop in ECB Bancorp's long position.| Bankwell Financial vs. Fifth Third Bancorp | Bankwell Financial vs. Zions Bancorporation | Bankwell Financial vs. Huntington Bancshares Incorporated | Bankwell Financial vs. PNC Financial Services |
| ECB Bancorp vs. Home Federal Bancorp | ECB Bancorp vs. Magyar Bancorp | ECB Bancorp vs. Community West Bancshares | ECB Bancorp vs. Lake Shore Bancorp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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