Correlation Between Century Financial and FS Bancorp
Can any of the company-specific risk be diversified away by investing in both Century Financial and FS 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 Century Financial and FS Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Financial Corp and FS Bancorp, you can compare the effects of market volatilities on Century Financial and FS 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 Century Financial with a short position of FS Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Financial and FS Bancorp.
Diversification Opportunities for Century Financial and FS Bancorp
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and FXLG is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Century Financial Corp and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Bancorp and Century 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 Century Financial Corp are associated (or correlated) with FS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Bancorp has no effect on the direction of Century Financial i.e., Century Financial and FS Bancorp go up and down completely randomly.
Pair Corralation between Century Financial and FS Bancorp
Given the investment horizon of 90 days Century Financial Corp is expected to generate 6.0 times more return on investment than FS Bancorp. However, Century Financial is 6.0 times more volatile than FS Bancorp. It trades about 0.27 of its potential returns per unit of risk. FS Bancorp is currently generating about 0.21 per unit of risk. If you would invest 3,300 in Century Financial Corp on August 29, 2024 and sell it today you would earn a total of 450.00 from holding Century Financial Corp or generate 13.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Century Financial Corp vs. FS Bancorp
Performance |
| Timeline |
| Century Financial Corp |
| FS Bancorp |
Century Financial and FS Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Financial and FS Bancorp
The main advantage of trading using opposite Century Financial and FS Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Financial position performs unexpectedly, FS 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 FS Bancorp will offset losses from the drop in FS Bancorp's long position.| Century Financial vs. Invesco High Income | Century Financial vs. Blackrock Muniholdings Ny | Century Financial vs. Nuveen California Select | Century Financial vs. MFS Investment Grade |
| FS Bancorp vs. Eastern Michigan Financial | FS Bancorp vs. Grand River Commerce | FS Bancorp vs. Bank of Botetourt | FS Bancorp vs. AmeriServ Financial |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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