Correlation Between Finward Bancorp and Community First
Can any of the company-specific risk be diversified away by investing in both Finward Bancorp and Community First 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 Community First into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finward Bancorp and Community First Bancorporation, you can compare the effects of market volatilities on Finward Bancorp and Community First 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 Community First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finward Bancorp and Community First.
Diversification Opportunities for Finward Bancorp and Community First
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Finward and Community is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Community First Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community First Banc 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 Community First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community First Banc has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and Community First go up and down completely randomly.
Pair Corralation between Finward Bancorp and Community First
Given the investment horizon of 90 days Finward Bancorp is expected to generate 1.22 times less return on investment than Community First. But when comparing it to its historical volatility, Finward Bancorp is 1.99 times less risky than Community First. It trades about 0.13 of its potential returns per unit of risk. Community First Bancorporation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 605.00 in Community First Bancorporation on September 3, 2024 and sell it today you would earn a total of 195.00 from holding Community First Bancorporation or generate 32.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 65.99% |
| Values | Daily Returns |
Finward Bancorp vs. Community First Bancorp.
Performance |
| Timeline |
| Finward Bancorp |
| Community First Banc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Finward Bancorp and Community First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finward Bancorp and Community First
The main advantage of trading using opposite Finward Bancorp and Community First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finward Bancorp position performs unexpectedly, Community First 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 Community First will offset losses from the drop in Community First's 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 |
| Community First vs. Citizens Financial Corp | Community First vs. Croghan Bancshares | Community First vs. Commercial National Financial | Community First vs. CCFNB 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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