Correlation Between Finward Bancorp and Prosperity Bancshares
Can any of the company-specific risk be diversified away by investing in both Finward Bancorp and Prosperity 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 Prosperity 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 Prosperity Bancshares, you can compare the effects of market volatilities on Finward Bancorp and Prosperity 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 Prosperity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finward Bancorp and Prosperity Bancshares.
Diversification Opportunities for Finward Bancorp and Prosperity Bancshares
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Finward and Prosperity is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Prosperity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosperity 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 Prosperity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosperity Bancshares has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and Prosperity Bancshares go up and down completely randomly.
Pair Corralation between Finward Bancorp and Prosperity Bancshares
Given the investment horizon of 90 days Finward Bancorp is expected to generate 1.12 times more return on investment than Prosperity Bancshares. However, Finward Bancorp is 1.12 times more volatile than Prosperity Bancshares. It trades about 0.02 of its potential returns per unit of risk. Prosperity Bancshares is currently generating about -0.06 per unit of risk. If you would invest 3,075 in Finward Bancorp on September 12, 2024 and sell it today you would earn a total of 10.00 from holding Finward Bancorp or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Finward Bancorp vs. Prosperity Bancshares
Performance |
| Timeline |
| Finward Bancorp |
| Prosperity Bancshares |
Finward Bancorp and Prosperity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finward Bancorp and Prosperity Bancshares
The main advantage of trading using opposite Finward Bancorp and Prosperity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finward Bancorp position performs unexpectedly, Prosperity 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 Prosperity Bancshares will offset losses from the drop in Prosperity 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 |
| Prosperity Bancshares vs. Heartland Financial USA | Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American 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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