Correlation Between Finward Bancorp and First United
Can any of the company-specific risk be diversified away by investing in both Finward Bancorp and First United 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 First United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finward Bancorp and First United, you can compare the effects of market volatilities on Finward Bancorp and First United 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 First United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finward Bancorp and First United.
Diversification Opportunities for Finward Bancorp and First United
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Finward and First is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and First United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First United 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 First United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First United has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and First United go up and down completely randomly.
Pair Corralation between Finward Bancorp and First United
Given the investment horizon of 90 days Finward Bancorp is expected to under-perform the First United. But the stock apears to be less risky and, when comparing its historical volatility, Finward Bancorp is 1.63 times less risky than First United. The stock trades about -0.04 of its potential returns per unit of risk. The First United is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 3,110 in First United on August 30, 2024 and sell it today you would earn a total of 446.00 from holding First United or generate 14.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finward Bancorp vs. First United
Performance |
| Timeline |
| Finward Bancorp |
| First United |
Finward Bancorp and First United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finward Bancorp and First United
The main advantage of trading using opposite Finward Bancorp and First United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finward Bancorp position performs unexpectedly, First United 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 First United will offset losses from the drop in First United'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 |
| First United vs. First Community | First United vs. Greene County Bancorp | First United vs. Community West Bancshares | First United vs. Affinity 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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