Correlation Between FB Financial and Red River
Can any of the company-specific risk be diversified away by investing in both FB Financial and Red River 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 Red River 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 Red River Bancshares, you can compare the effects of market volatilities on FB Financial and Red River 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 Red River. Check out your portfolio center. Please also check ongoing floating volatility patterns of FB Financial and Red River.
Diversification Opportunities for FB Financial and Red River
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FBK and Red is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding FB Financial Corp and Red River Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red River Bancshares 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 Red River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red River Bancshares has no effect on the direction of FB Financial i.e., FB Financial and Red River go up and down completely randomly.
Pair Corralation between FB Financial and Red River
Considering the 90-day investment horizon FB Financial Corp is expected to generate 2.03 times more return on investment than Red River. However, FB Financial is 2.03 times more volatile than Red River Bancshares. It trades about 0.19 of its potential returns per unit of risk. Red River Bancshares is currently generating about 0.37 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. Red River Bancshares
Performance |
| Timeline |
| FB Financial Corp |
| Red River Bancshares |
FB Financial and Red River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FB Financial and Red River
The main advantage of trading using opposite FB Financial and Red River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FB Financial position performs unexpectedly, Red River 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 Red River will offset losses from the drop in Red River'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 |
| Red River vs. Home Federal Bancorp | Red River vs. Magyar Bancorp | Red River vs. Community West Bancshares | Red River vs. Rhinebeck 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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