Correlation Between Finward Bancorp and ServisFirst Bancshares
Can any of the company-specific risk be diversified away by investing in both Finward Bancorp and ServisFirst 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 ServisFirst 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 ServisFirst Bancshares, you can compare the effects of market volatilities on Finward Bancorp and ServisFirst 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 ServisFirst Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finward Bancorp and ServisFirst Bancshares.
Diversification Opportunities for Finward Bancorp and ServisFirst Bancshares
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Finward and ServisFirst is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and ServisFirst Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServisFirst 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 ServisFirst Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServisFirst Bancshares has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and ServisFirst Bancshares go up and down completely randomly.
Pair Corralation between Finward Bancorp and ServisFirst Bancshares
Given the investment horizon of 90 days Finward Bancorp is expected to under-perform the ServisFirst Bancshares. But the stock apears to be less risky and, when comparing its historical volatility, Finward Bancorp is 3.29 times less risky than ServisFirst Bancshares. The stock trades about -0.08 of its potential returns per unit of risk. The ServisFirst Bancshares is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 8,447 in ServisFirst Bancshares on September 4, 2024 and sell it today you would earn a total of 981.00 from holding ServisFirst Bancshares or generate 11.61% 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. ServisFirst Bancshares
Performance |
| Timeline |
| Finward Bancorp |
| ServisFirst Bancshares |
Finward Bancorp and ServisFirst Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finward Bancorp and ServisFirst Bancshares
The main advantage of trading using opposite Finward Bancorp and ServisFirst Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finward Bancorp position performs unexpectedly, ServisFirst 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 ServisFirst Bancshares will offset losses from the drop in ServisFirst 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 |
| ServisFirst Bancshares vs. International Bancshares | ServisFirst Bancshares vs. Finward Bancorp | ServisFirst Bancshares vs. Aquagold International | ServisFirst Bancshares vs. Thrivent High Yield |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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