Correlation Between Finward Bancorp and Affinity Bancshares
Can any of the company-specific risk be diversified away by investing in both Finward Bancorp and Affinity Bancshares 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 Finward Bancorp and Affinity Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finward Bancorp and Affinity Bancshares, you can compare the effects of market volatilities on Finward Bancorp and Affinity Bancshares 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 Finward Bancorp with a short position of Affinity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finward Bancorp and Affinity Bancshares.
Diversification Opportunities for Finward Bancorp and Affinity Bancshares
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Finward and Affinity is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Affinity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Bancshares and Finward Bancorp 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 Finward Bancorp are associated (or correlated) with Affinity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity Bancshares has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and Affinity Bancshares go up and down completely randomly.
Pair Corralation between Finward Bancorp and Affinity Bancshares
Given the investment horizon of 90 days Finward Bancorp is expected to under-perform the Affinity Bancshares. In addition to that, Finward Bancorp is 1.31 times more volatile than Affinity Bancshares. It trades about -0.07 of its total potential returns per unit of risk. Affinity Bancshares is currently generating about 0.06 per unit of volatility. If you would invest 2,124 in Affinity Bancshares on August 28, 2024 and sell it today you would earn a total of 21.00 from holding Affinity Bancshares or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finward Bancorp vs. Affinity Bancshares
Performance |
| Timeline |
| Finward Bancorp |
| Affinity Bancshares |
Finward Bancorp and Affinity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finward Bancorp and Affinity Bancshares
The main advantage of trading using opposite Finward Bancorp and Affinity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finward Bancorp position performs unexpectedly, Affinity Bancshares 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 Affinity Bancshares will offset losses from the drop in Affinity Bancshares' long position.| Finward Bancorp vs. Community West Bancshares | Finward Bancorp vs. First Financial Northwest | Finward Bancorp vs. Oak Valley Bancorp | Finward Bancorp vs. Home Federal Bancorp |
| Affinity Bancshares vs. Home Federal Bancorp | Affinity Bancshares vs. Magyar Bancorp | Affinity Bancshares vs. Community West 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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