Correlation Between First Guaranty and FS Bancorp
Can any of the company-specific risk be diversified away by investing in both First Guaranty and FS 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 First Guaranty and FS Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Guaranty Bancshares and FS Bancorp, you can compare the effects of market volatilities on First Guaranty and FS 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 First Guaranty with a short position of FS Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Guaranty and FS Bancorp.
Diversification Opportunities for First Guaranty and FS Bancorp
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and FSBW is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding First Guaranty Bancshares and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Bancorp and First Guaranty 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 Guaranty Bancshares are associated (or correlated) with FS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Bancorp has no effect on the direction of First Guaranty i.e., First Guaranty and FS Bancorp go up and down completely randomly.
Pair Corralation between First Guaranty and FS Bancorp
Given the investment horizon of 90 days First Guaranty is expected to generate 1.33 times less return on investment than FS Bancorp. In addition to that, First Guaranty is 1.01 times more volatile than FS Bancorp. It trades about 0.05 of its total potential returns per unit of risk. FS Bancorp is currently generating about 0.07 per unit of volatility. If you would invest 3,587 in FS Bancorp on September 3, 2024 and sell it today you would earn a total of 1,183 from holding FS Bancorp or generate 32.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Guaranty Bancshares vs. FS Bancorp
Performance |
| Timeline |
| First Guaranty Bancshares |
| FS Bancorp |
First Guaranty and FS Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Guaranty and FS Bancorp
The main advantage of trading using opposite First Guaranty and FS Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Guaranty position performs unexpectedly, FS 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 FS Bancorp will offset losses from the drop in FS Bancorp's long position.| First Guaranty vs. Community West Bancshares | First Guaranty vs. First Northwest Bancorp | First Guaranty vs. First Financial Northwest | First Guaranty vs. Great Southern Bancorp |
| FS Bancorp vs. First Community | FS Bancorp vs. Oak Valley Bancorp | FS Bancorp vs. First Financial Northwest | FS Bancorp vs. ESSA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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