Correlation Between ESSA Bancorp and Finwise Bancorp
Can any of the company-specific risk be diversified away by investing in both ESSA Bancorp and Finwise 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 ESSA Bancorp and Finwise Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSA Bancorp and Finwise Bancorp, you can compare the effects of market volatilities on ESSA Bancorp and Finwise 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 ESSA Bancorp with a short position of Finwise Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSA Bancorp and Finwise Bancorp.
Diversification Opportunities for ESSA Bancorp and Finwise Bancorp
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ESSA and Finwise is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ESSA Bancorp and Finwise Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finwise Bancorp and ESSA Bancorp 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 ESSA Bancorp are associated (or correlated) with Finwise Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finwise Bancorp has no effect on the direction of ESSA Bancorp i.e., ESSA Bancorp and Finwise Bancorp go up and down completely randomly.
Pair Corralation between ESSA Bancorp and Finwise Bancorp
Given the investment horizon of 90 days ESSA Bancorp is expected to generate 4.64 times less return on investment than Finwise Bancorp. In addition to that, ESSA Bancorp is 1.04 times more volatile than Finwise Bancorp. It trades about 0.02 of its total potential returns per unit of risk. Finwise Bancorp is currently generating about 0.08 per unit of volatility. If you would invest 895.00 in Finwise Bancorp on August 28, 2024 and sell it today you would earn a total of 910.00 from holding Finwise Bancorp or generate 101.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESSA Bancorp vs. Finwise Bancorp
Performance |
| Timeline |
| ESSA Bancorp |
| Finwise Bancorp |
ESSA Bancorp and Finwise Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSA Bancorp and Finwise Bancorp
The main advantage of trading using opposite ESSA Bancorp and Finwise Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSA Bancorp position performs unexpectedly, Finwise 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 Finwise Bancorp will offset losses from the drop in Finwise Bancorp's long position.| ESSA Bancorp vs. Community West Bancshares | ESSA Bancorp vs. First Northwest Bancorp | ESSA Bancorp vs. First Community | ESSA Bancorp vs. Oak Valley Bancorp |
| Finwise Bancorp vs. Home Federal Bancorp | Finwise Bancorp vs. First Financial Northwest | Finwise Bancorp vs. First Northwest Bancorp | Finwise Bancorp vs. First Capital |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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