Correlation Between Franklin Financial and Affinity Bancshares
Can any of the company-specific risk be diversified away by investing in both Franklin Financial and Affinity 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 Franklin Financial and Affinity Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Financial Services and Affinity Bancshares, you can compare the effects of market volatilities on Franklin Financial and Affinity 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 Franklin Financial with a short position of Affinity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Financial and Affinity Bancshares.
Diversification Opportunities for Franklin Financial and Affinity Bancshares
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Affinity is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Financial Services and Affinity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Bancshares and Franklin Financial 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 Franklin Financial Services are associated (or correlated) with Affinity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity Bancshares has no effect on the direction of Franklin Financial i.e., Franklin Financial and Affinity Bancshares go up and down completely randomly.
Pair Corralation between Franklin Financial and Affinity Bancshares
Given the investment horizon of 90 days Franklin Financial Services is expected to generate 0.84 times more return on investment than Affinity Bancshares. However, Franklin Financial Services is 1.19 times less risky than Affinity Bancshares. It trades about 0.04 of its potential returns per unit of risk. Affinity Bancshares is currently generating about 0.03 per unit of risk. If you would invest 3,033 in Franklin Financial Services on November 2, 2024 and sell it today you would earn a total of 426.00 from holding Franklin Financial Services or generate 14.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Franklin Financial Services vs. Affinity Bancshares
Performance |
| Timeline |
| Franklin Financial |
| Affinity Bancshares |
Franklin Financial and Affinity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Financial and Affinity Bancshares
The main advantage of trading using opposite Franklin Financial and Affinity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Financial position performs unexpectedly, Affinity 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 Affinity Bancshares will offset losses from the drop in Affinity Bancshares' long position.| Franklin Financial vs. Magyar Bancorp | Franklin Financial vs. Affinity Bancshares | Franklin Financial vs. Home Federal Bancorp | Franklin Financial vs. Sound Financial Bancorp |
| Affinity Bancshares vs. Home Federal Bancorp | Affinity Bancshares vs. Magyar Bancorp | Affinity Bancshares 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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