Correlation Between Community First and Finward Bancorp
Can any of the company-specific risk be diversified away by investing in both Community First and Finward 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 Community First and Finward Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community First Bancorporation and Finward Bancorp, you can compare the effects of market volatilities on Community First and Finward 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 Community First with a short position of Finward Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community First and Finward Bancorp.
Diversification Opportunities for Community First and Finward Bancorp
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Community and Finward is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Community First Bancorp. and Finward Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finward Bancorp and Community First 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 Community First Bancorporation are associated (or correlated) with Finward Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finward Bancorp has no effect on the direction of Community First i.e., Community First and Finward Bancorp go up and down completely randomly.
Pair Corralation between Community First and Finward Bancorp
Given the investment horizon of 90 days Community First Bancorporation is expected to generate 1.99 times more return on investment than Finward Bancorp. However, Community First is 1.99 times more volatile than Finward Bancorp. It trades about 0.08 of its potential returns per unit of risk. Finward Bancorp is currently generating about 0.13 per unit of risk. If you would invest 605.00 in Community First Bancorporation on September 3, 2024 and sell it today you would earn a total of 195.00 from holding Community First Bancorporation or generate 32.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 65.99% |
| Values | Daily Returns |
Community First Bancorp. vs. Finward Bancorp
Performance |
| Timeline |
| Community First Banc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Finward Bancorp |
Community First and Finward Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community First and Finward Bancorp
The main advantage of trading using opposite Community First and Finward Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community First position performs unexpectedly, Finward 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 Finward Bancorp will offset losses from the drop in Finward Bancorp's long position.| Community First vs. Citizens Financial Corp | Community First vs. Croghan Bancshares | Community First vs. Commercial National Financial | Community First vs. CCFNB Bancorp |
| Finward Bancorp vs. Community West Bancshares | Finward Bancorp vs. First Financial Northwest | Finward Bancorp vs. Oak Valley Bancorp | Finward Bancorp vs. Home Federal 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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