Correlation Between FS Bancorp and First Community
Can any of the company-specific risk be diversified away by investing in both FS Bancorp and First Community 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 First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FS Bancorp and First Community, you can compare the effects of market volatilities on FS Bancorp and First Community 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 First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of FS Bancorp and First Community.
Diversification Opportunities for FS Bancorp and First Community
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FSBW and First is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding FS Bancorp and First Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community 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 First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community has no effect on the direction of FS Bancorp i.e., FS Bancorp and First Community go up and down completely randomly.
Pair Corralation between FS Bancorp and First Community
Given the investment horizon of 90 days FS Bancorp is expected to generate 1.65 times less return on investment than First Community. In addition to that, FS Bancorp is 1.51 times more volatile than First Community. It trades about 0.12 of its total potential returns per unit of risk. First Community is currently generating about 0.31 per unit of volatility. If you would invest 2,291 in First Community on August 27, 2024 and sell it today you would earn a total of 261.00 from holding First Community or generate 11.39% 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. First Community
Performance |
| Timeline |
| FS Bancorp |
| First Community |
FS Bancorp and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FS Bancorp and First Community
The main advantage of trading using opposite FS Bancorp and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FS Bancorp position performs unexpectedly, First Community 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 First Community will offset losses from the drop in First Community'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 |
| First Community vs. Community West Bancshares | First Community vs. First Financial Northwest | First Community vs. First Northwest Bancorp | First Community vs. Home Federal 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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