Correlation Between Bankwell Financial and Luther Burbank
Can any of the company-specific risk be diversified away by investing in both Bankwell Financial and Luther Burbank 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 Luther Burbank 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 Luther Burbank, you can compare the effects of market volatilities on Bankwell Financial and Luther Burbank 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 Luther Burbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankwell Financial and Luther Burbank.
Diversification Opportunities for Bankwell Financial and Luther Burbank
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bankwell and Luther is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bankwell Financial Group and Luther Burbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luther Burbank 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 Luther Burbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luther Burbank has no effect on the direction of Bankwell Financial i.e., Bankwell Financial and Luther Burbank go up and down completely randomly.
Pair Corralation between Bankwell Financial and Luther Burbank
If you would invest 2,833 in Bankwell Financial Group on September 1, 2024 and sell it today you would earn a total of 482.00 from holding Bankwell Financial Group or generate 17.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Bankwell Financial Group vs. Luther Burbank
Performance |
| Timeline |
| Bankwell Financial |
| Luther Burbank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bankwell Financial and Luther Burbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bankwell Financial and Luther Burbank
The main advantage of trading using opposite Bankwell Financial and Luther Burbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankwell Financial position performs unexpectedly, Luther Burbank 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 Luther Burbank will offset losses from the drop in Luther Burbank'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 |
| Luther Burbank vs. First Community | Luther Burbank vs. Community West Bancshares | Luther Burbank vs. First Financial Northwest | Luther Burbank vs. First Northwest 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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