Correlation Between FB Financial and Bank Ozk
Can any of the company-specific risk be diversified away by investing in both FB Financial and Bank Ozk 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 Bank Ozk 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 Bank Ozk, you can compare the effects of market volatilities on FB Financial and Bank Ozk 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 Bank Ozk. Check out your portfolio center. Please also check ongoing floating volatility patterns of FB Financial and Bank Ozk.
Diversification Opportunities for FB Financial and Bank Ozk
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FBK and Bank is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding FB Financial Corp and Bank Ozk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Ozk 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 Bank Ozk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Ozk has no effect on the direction of FB Financial i.e., FB Financial and Bank Ozk go up and down completely randomly.
Pair Corralation between FB Financial and Bank Ozk
Considering the 90-day investment horizon FB Financial Corp is expected to generate 0.94 times more return on investment than Bank Ozk. However, FB Financial Corp is 1.07 times less risky than Bank Ozk. It trades about 0.09 of its potential returns per unit of risk. Bank Ozk is currently generating about 0.05 per unit of risk. If you would invest 3,512 in FB Financial Corp on November 4, 2024 and sell it today you would earn a total of 1,769 from holding FB Financial Corp or generate 50.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FB Financial Corp vs. Bank Ozk
Performance |
| Timeline |
| FB Financial Corp |
| Bank Ozk |
FB Financial and Bank Ozk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FB Financial and Bank Ozk
The main advantage of trading using opposite FB Financial and Bank Ozk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FB Financial position performs unexpectedly, Bank Ozk 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 Bank Ozk will offset losses from the drop in Bank Ozk's long position.| FB Financial vs. Home Bancorp | FB Financial vs. First Business Financial | FB Financial vs. LINKBANCORP | FB Financial vs. Great Southern Bancorp |
| Bank Ozk vs. International Bancshares | Bank Ozk vs. Hilltop Holdings | Bank Ozk vs. FB Financial Corp | Bank Ozk vs. Red River Bancshares |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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