Correlation Between First Business and FB Financial
Can any of the company-specific risk be diversified away by investing in both First Business and FB Financial 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 First Business and FB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Business Financial and FB Financial Corp, you can compare the effects of market volatilities on First Business and FB Financial 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 First Business with a short position of FB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Business and FB Financial.
Diversification Opportunities for First Business and FB Financial
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and FBK is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding First Business Financial and FB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FB Financial Corp and First Business 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 First Business Financial are associated (or correlated) with FB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FB Financial Corp has no effect on the direction of First Business i.e., First Business and FB Financial go up and down completely randomly.
Pair Corralation between First Business and FB Financial
Given the investment horizon of 90 days First Business Financial is expected to generate 0.92 times more return on investment than FB Financial. However, First Business Financial is 1.09 times less risky than FB Financial. It trades about 0.05 of its potential returns per unit of risk. FB Financial Corp is currently generating about 0.04 per unit of risk. If you would invest 3,338 in First Business Financial on November 19, 2024 and sell it today you would earn a total of 1,938 from holding First Business Financial or generate 58.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Business Financial vs. FB Financial Corp
Performance |
| Timeline |
| First Business Financial |
| FB Financial Corp |
First Business and FB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Business and FB Financial
The main advantage of trading using opposite First Business and FB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Business position performs unexpectedly, FB Financial 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 FB Financial will offset losses from the drop in FB Financial's long position.| First Business vs. Home Federal Bancorp | First Business vs. Lake Shore Bancorp | First Business vs. Old Point Financial | First Business vs. Parke Bancorp |
| FB Financial vs. Home Bancorp | FB Financial vs. First Business Financial | FB Financial vs. LINKBANCORP | FB Financial vs. Great Southern 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 Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |