Correlation Between Bankwell Financial and FormFactor
Can any of the company-specific risk be diversified away by investing in both Bankwell Financial and FormFactor 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 FormFactor 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 FormFactor, you can compare the effects of market volatilities on Bankwell Financial and FormFactor 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 FormFactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankwell Financial and FormFactor.
Diversification Opportunities for Bankwell Financial and FormFactor
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bankwell and FormFactor is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bankwell Financial Group and FormFactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormFactor 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 FormFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormFactor has no effect on the direction of Bankwell Financial i.e., Bankwell Financial and FormFactor go up and down completely randomly.
Pair Corralation between Bankwell Financial and FormFactor
Given the investment horizon of 90 days Bankwell Financial Group is expected to generate 0.83 times more return on investment than FormFactor. However, Bankwell Financial Group is 1.21 times less risky than FormFactor. It trades about -0.1 of its potential returns per unit of risk. FormFactor is currently generating about -0.13 per unit of risk. If you would invest 3,109 in Bankwell Financial Group on October 23, 2024 and sell it today you would lose (126.00) from holding Bankwell Financial Group or give up 4.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bankwell Financial Group vs. FormFactor
Performance |
| Timeline |
| Bankwell Financial |
| FormFactor |
Bankwell Financial and FormFactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bankwell Financial and FormFactor
The main advantage of trading using opposite Bankwell Financial and FormFactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankwell Financial position performs unexpectedly, FormFactor 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 FormFactor will offset losses from the drop in FormFactor'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 |
| FormFactor vs. Silicon Laboratories | FormFactor vs. Diodes Incorporated | FormFactor vs. MACOM Technology Solutions | FormFactor vs. Amkor Technology |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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