Correlation Between FS Bancorp and Dow Jones
Can any of the company-specific risk be diversified away by investing in both FS Bancorp and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FS Bancorp and Dow Jones Industrial, you can compare the effects of market volatilities on FS Bancorp and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of FS Bancorp and Dow Jones.
Diversification Opportunities for FS Bancorp and Dow Jones
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FSBW and Dow is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding FS Bancorp and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of FS Bancorp i.e., FS Bancorp and Dow Jones go up and down completely randomly.
Pair Corralation between FS Bancorp and Dow Jones
Given the investment horizon of 90 days FS Bancorp is expected to generate 2.61 times more return on investment than Dow Jones. However, FS Bancorp is 2.61 times more volatile than Dow Jones Industrial. It trades about 0.12 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 4,480 in FS Bancorp on August 27, 2024 and sell it today you would earn a total of 280.00 from holding FS Bancorp or generate 6.25% 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. Dow Jones Industrial
Performance |
| Timeline |
FS Bancorp and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
FS Bancorp
Pair trading matchups for FS Bancorp
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with FS Bancorp and Dow Jones
The main advantage of trading using opposite FS Bancorp and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FS Bancorp position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| FS Bancorp vs. First Community | FS Bancorp vs. Oak Valley Bancorp | FS Bancorp vs. First Financial Northwest | FS Bancorp vs. ESSA Bancorp |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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