Correlation Between FB Financial and Cadence Bancorp
Can any of the company-specific risk be diversified away by investing in both FB Financial and Cadence 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 FB Financial and Cadence Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FB Financial Corp and Cadence Bancorp, you can compare the effects of market volatilities on FB Financial and Cadence 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 FB Financial with a short position of Cadence Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of FB Financial and Cadence Bancorp.
Diversification Opportunities for FB Financial and Cadence Bancorp
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FBK and Cadence is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding FB Financial Corp and Cadence Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Bancorp and FB 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 FB Financial Corp are associated (or correlated) with Cadence Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Bancorp has no effect on the direction of FB Financial i.e., FB Financial and Cadence Bancorp go up and down completely randomly.
Pair Corralation between FB Financial and Cadence Bancorp
Considering the 90-day investment horizon FB Financial Corp is expected to generate 1.09 times more return on investment than Cadence Bancorp. However, FB Financial is 1.09 times more volatile than Cadence Bancorp. It trades about 0.19 of its potential returns per unit of risk. Cadence Bancorp is currently generating about 0.2 per unit of risk. If you would invest 4,903 in FB Financial Corp on September 1, 2024 and sell it today you would earn a total of 742.00 from holding FB Financial Corp or generate 15.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FB Financial Corp vs. Cadence Bancorp
Performance |
| Timeline |
| FB Financial Corp |
| Cadence Bancorp |
FB Financial and Cadence Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FB Financial and Cadence Bancorp
The main advantage of trading using opposite FB Financial and Cadence Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FB Financial position performs unexpectedly, Cadence 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 Cadence Bancorp will offset losses from the drop in Cadence Bancorp's long position.| FB Financial vs. Affinity Bancshares | FB Financial vs. Southern California Bancorp | FB Financial vs. Auburn National Bancorporation | FB Financial vs. BayCom Corp |
| Cadence Bancorp vs. NBT Bancorp | Cadence Bancorp vs. Financial Institutions | Cadence Bancorp vs. Berkshire Hills Bancorp | Cadence Bancorp vs. Fidelity DD 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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