Correlation Between Finward Bancorp and TrustCo Bank
Can any of the company-specific risk be diversified away by investing in both Finward Bancorp and TrustCo Bank 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 TrustCo Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finward Bancorp and TrustCo Bank Corp, you can compare the effects of market volatilities on Finward Bancorp and TrustCo Bank 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 TrustCo Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finward Bancorp and TrustCo Bank.
Diversification Opportunities for Finward Bancorp and TrustCo Bank
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Finward and TrustCo is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and TrustCo Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrustCo Bank Corp 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 TrustCo Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrustCo Bank Corp has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and TrustCo Bank go up and down completely randomly.
Pair Corralation between Finward Bancorp and TrustCo Bank
Given the investment horizon of 90 days Finward Bancorp is expected to generate 1.95 times less return on investment than TrustCo Bank. But when comparing it to its historical volatility, Finward Bancorp is 1.28 times less risky than TrustCo Bank. It trades about 0.07 of its potential returns per unit of risk. TrustCo Bank Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,216 in TrustCo Bank Corp on September 12, 2024 and sell it today you would earn a total of 445.00 from holding TrustCo Bank Corp or generate 13.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finward Bancorp vs. TrustCo Bank Corp
Performance |
| Timeline |
| Finward Bancorp |
| TrustCo Bank Corp |
Finward Bancorp and TrustCo Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finward Bancorp and TrustCo Bank
The main advantage of trading using opposite Finward Bancorp and TrustCo Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finward Bancorp position performs unexpectedly, TrustCo Bank 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 TrustCo Bank will offset losses from the drop in TrustCo Bank'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 |
| TrustCo Bank vs. Southern Missouri Bancorp | TrustCo Bank vs. IF Bancorp | TrustCo Bank vs. Colony Bankcorp | TrustCo Bank vs. Old Point Financial |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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