Correlation Between Five Star and FS Bancorp
Can any of the company-specific risk be diversified away by investing in both Five Star and FS 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 Five Star and FS Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Five Star Bancorp and FS Bancorp, you can compare the effects of market volatilities on Five Star and FS 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 Five Star with a short position of FS Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five Star and FS Bancorp.
Diversification Opportunities for Five Star and FS Bancorp
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Five and FSBW is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Five Star Bancorp and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Bancorp and Five Star 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 Five Star Bancorp are associated (or correlated) with FS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Bancorp has no effect on the direction of Five Star i.e., Five Star and FS Bancorp go up and down completely randomly.
Pair Corralation between Five Star and FS Bancorp
Given the investment horizon of 90 days Five Star Bancorp is expected to generate 1.1 times more return on investment than FS Bancorp. However, Five Star is 1.1 times more volatile than FS Bancorp. It trades about 0.17 of its potential returns per unit of risk. FS Bancorp is currently generating about 0.1 per unit of risk. If you would invest 3,020 in Five Star Bancorp on August 25, 2024 and sell it today you would earn a total of 319.00 from holding Five Star Bancorp or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Five Star Bancorp vs. FS Bancorp
Performance |
| Timeline |
| Five Star Bancorp |
| FS Bancorp |
Five Star and FS Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Five Star and FS Bancorp
The main advantage of trading using opposite Five Star and FS Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five Star position performs unexpectedly, FS 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 FS Bancorp will offset losses from the drop in FS Bancorp's long position.| Five Star vs. Community West Bancshares | Five Star vs. First Northwest Bancorp | Five Star vs. Home Federal Bancorp | Five Star vs. First Financial Northwest |
| FS Bancorp vs. First Community | FS Bancorp vs. Oak Valley Bancorp | FS Bancorp vs. First Financial Northwest | FS Bancorp vs. ESSA 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 Stocks Directory module to find actively traded stocks across global markets.
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