Correlation Between First Interstate and Bankwell Financial
Can any of the company-specific risk be diversified away by investing in both First Interstate and Bankwell Financial 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 Interstate and Bankwell Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Interstate BancSystem and Bankwell Financial Group, you can compare the effects of market volatilities on First Interstate and Bankwell Financial 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 Interstate with a short position of Bankwell Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Interstate and Bankwell Financial.
Diversification Opportunities for First Interstate and Bankwell Financial
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Bankwell is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Interstate BancSystem and Bankwell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankwell Financial and First Interstate 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 Interstate BancSystem are associated (or correlated) with Bankwell Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankwell Financial has no effect on the direction of First Interstate i.e., First Interstate and Bankwell Financial go up and down completely randomly.
Pair Corralation between First Interstate and Bankwell Financial
Given the investment horizon of 90 days First Interstate BancSystem is expected to generate 0.87 times more return on investment than Bankwell Financial. However, First Interstate BancSystem is 1.16 times less risky than Bankwell Financial. It trades about 0.01 of its potential returns per unit of risk. Bankwell Financial Group is currently generating about -0.08 per unit of risk. If you would invest 3,253 in First Interstate BancSystem on October 22, 2024 and sell it today you would earn a total of 1.00 from holding First Interstate BancSystem or generate 0.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Interstate BancSystem vs. Bankwell Financial Group
Performance |
| Timeline |
| First Interstate Ban |
| Bankwell Financial |
First Interstate and Bankwell Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Interstate and Bankwell Financial
The main advantage of trading using opposite First Interstate and Bankwell Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Interstate position performs unexpectedly, Bankwell Financial 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 Bankwell Financial will offset losses from the drop in Bankwell Financial's long position.| First Interstate vs. First Financial Bankshares | First Interstate vs. CVB Financial | First Interstate vs. Eagle Bancorp Montana | First Interstate vs. Glacier Bancorp |
| Bankwell Financial vs. Franklin Financial Services | Bankwell Financial vs. The First Bancshares, | Bankwell Financial vs. Home Federal Bancorp | Bankwell Financial vs. Lake Shore 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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