Correlation Between Finward Bancorp and Teb Bancorp
Can any of the company-specific risk be diversified away by investing in both Finward Bancorp and Teb Bancorp 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 Teb Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finward Bancorp and Teb Bancorp, you can compare the effects of market volatilities on Finward Bancorp and Teb Bancorp 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 Teb Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finward Bancorp and Teb Bancorp.
Diversification Opportunities for Finward Bancorp and Teb Bancorp
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finward and Teb is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Teb Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teb Bancorp 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 Teb Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teb Bancorp has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and Teb Bancorp go up and down completely randomly.
Pair Corralation between Finward Bancorp and Teb Bancorp
Given the investment horizon of 90 days Finward Bancorp is expected to under-perform the Teb Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Finward Bancorp is 3.24 times less risky than Teb Bancorp. The stock trades about -0.16 of its potential returns per unit of risk. The Teb Bancorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 693.00 in Teb Bancorp on October 29, 2024 and sell it today you would earn a total of 3.00 from holding Teb Bancorp or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finward Bancorp vs. Teb Bancorp
Performance |
| Timeline |
| Finward Bancorp |
| Teb Bancorp |
Finward Bancorp and Teb Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finward Bancorp and Teb Bancorp
The main advantage of trading using opposite Finward Bancorp and Teb Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finward Bancorp position performs unexpectedly, Teb Bancorp 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 Teb Bancorp will offset losses from the drop in Teb Bancorp'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 |
| Teb Bancorp vs. Sound Financial Bancorp | Teb Bancorp vs. Finward Bancorp | Teb Bancorp vs. Franklin Financial Services | Teb Bancorp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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