Correlation Between Freedom Bank and F M
Can any of the company-specific risk be diversified away by investing in both Freedom Bank and F M 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 Freedom Bank and F M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Bank of and F M Bank, you can compare the effects of market volatilities on Freedom Bank and F M 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 Freedom Bank with a short position of F M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and F M.
Diversification Opportunities for Freedom Bank and F M
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Freedom and FMBM is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and F M Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F M Bank and Freedom Bank 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 Freedom Bank of are associated (or correlated) with F M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F M Bank has no effect on the direction of Freedom Bank i.e., Freedom Bank and F M go up and down completely randomly.
Pair Corralation between Freedom Bank and F M
Given the investment horizon of 90 days Freedom Bank of is expected to under-perform the F M. In addition to that, Freedom Bank is 1.6 times more volatile than F M Bank. It trades about -0.03 of its total potential returns per unit of risk. F M Bank is currently generating about -0.03 per unit of volatility. If you would invest 2,000 in F M Bank on November 2, 2024 and sell it today you would lose (8.00) from holding F M Bank or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Bank of vs. F M Bank
Performance |
| Timeline |
| Freedom Bank |
| F M Bank |
Freedom Bank and F M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and F M
The main advantage of trading using opposite Freedom Bank and F M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank position performs unexpectedly, F M 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 F M will offset losses from the drop in F M's long position.| Freedom Bank vs. National Capital Bank | Freedom Bank vs. Community Heritage Financial | Freedom Bank vs. Citizens Financial Corp | Freedom Bank vs. Bank of Idaho |
| F M vs. DTF Tax Free | F M vs. MFS Investment Grade | F M vs. Nuveen California Select | F M vs. Federated Premier Municipal |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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