Correlation Between Eastern Michigan and FS Bancorp
Can any of the company-specific risk be diversified away by investing in both Eastern Michigan 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 Eastern Michigan and FS Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Michigan Financial and FS Bancorp, you can compare the effects of market volatilities on Eastern Michigan 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 Eastern Michigan with a short position of FS Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Michigan and FS Bancorp.
Diversification Opportunities for Eastern Michigan and FS Bancorp
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eastern and FXLG is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Michigan Financial and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Bancorp and Eastern Michigan 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 Eastern Michigan Financial 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 Eastern Michigan i.e., Eastern Michigan and FS Bancorp go up and down completely randomly.
Pair Corralation between Eastern Michigan and FS Bancorp
Given the investment horizon of 90 days Eastern Michigan Financial is expected to generate 1.76 times more return on investment than FS Bancorp. However, Eastern Michigan is 1.76 times more volatile than FS Bancorp. It trades about 0.05 of its potential returns per unit of risk. FS Bancorp is currently generating about 0.02 per unit of risk. If you would invest 2,284 in Eastern Michigan Financial on August 25, 2024 and sell it today you would earn a total of 1,257 from holding Eastern Michigan Financial or generate 55.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Eastern Michigan Financial vs. FS Bancorp
Performance |
| Timeline |
| Eastern Michigan Fin |
| FS Bancorp |
Eastern Michigan and FS Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Michigan and FS Bancorp
The main advantage of trading using opposite Eastern Michigan and FS Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Michigan 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.| Eastern Michigan vs. Commercial National Financial | Eastern Michigan vs. Mifflinburg Bancorp | Eastern Michigan vs. Apollo Bancorp | Eastern Michigan vs. Community Bankers |
| FS Bancorp vs. Standard Bank Group | FS Bancorp vs. PSB Holdings | FS Bancorp vs. United Overseas Bank | FS Bancorp vs. Turkiye Garanti Bankasi |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |