Correlation Between FS Bancorp and Bankwell Financial
Can any of the company-specific risk be diversified away by investing in both FS Bancorp and Bankwell Financial 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 FS Bancorp and Bankwell Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FS Bancorp and Bankwell Financial Group, you can compare the effects of market volatilities on FS Bancorp and Bankwell Financial 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 FS Bancorp with a short position of Bankwell Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of FS Bancorp and Bankwell Financial.
Diversification Opportunities for FS Bancorp and Bankwell Financial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FSBW and Bankwell is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding FS Bancorp and Bankwell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankwell Financial and FS 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 FS Bancorp are associated (or correlated) with Bankwell Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankwell Financial has no effect on the direction of FS Bancorp i.e., FS Bancorp and Bankwell Financial go up and down completely randomly.
Pair Corralation between FS Bancorp and Bankwell Financial
Given the investment horizon of 90 days FS Bancorp is expected to generate 1.01 times more return on investment than Bankwell Financial. However, FS Bancorp is 1.01 times more volatile than Bankwell Financial Group. It trades about 0.08 of its potential returns per unit of risk. Bankwell Financial Group is currently generating about 0.07 per unit of risk. If you would invest 2,729 in FS Bancorp on August 31, 2024 and sell it today you would earn a total of 2,033 from holding FS Bancorp or generate 74.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FS Bancorp vs. Bankwell Financial Group
Performance |
| Timeline |
| FS Bancorp |
| Bankwell Financial |
FS Bancorp and Bankwell Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FS Bancorp and Bankwell Financial
The main advantage of trading using opposite FS Bancorp and Bankwell Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FS Bancorp position performs unexpectedly, Bankwell Financial 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 Bankwell Financial will offset losses from the drop in Bankwell Financial's long position.| FS Bancorp vs. First Community | FS Bancorp vs. Oak Valley Bancorp | FS Bancorp vs. First Financial Northwest | FS Bancorp vs. ESSA Bancorp |
| Bankwell Financial vs. Franklin Financial Services | Bankwell Financial vs. The First Bancshares, | Bankwell Financial vs. Home Federal Bancorp | Bankwell Financial vs. Lake Shore 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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