Correlation Between FS Bancorp and National Bank
Can any of the company-specific risk be diversified away by investing in both FS Bancorp and National Bank 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 National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FS Bancorp and National Bank Holdings, you can compare the effects of market volatilities on FS Bancorp and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of FS Bancorp and National Bank.
Diversification Opportunities for FS Bancorp and National Bank
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FSBW and National is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding FS Bancorp and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of FS Bancorp i.e., FS Bancorp and National Bank go up and down completely randomly.
Pair Corralation between FS Bancorp and National Bank
Given the investment horizon of 90 days FS Bancorp is expected to under-perform the National Bank. In addition to that, FS Bancorp is 1.42 times more volatile than National Bank Holdings. It trades about -0.13 of its total potential returns per unit of risk. National Bank Holdings is currently generating about -0.06 per unit of volatility. If you would invest 4,264 in National Bank Holdings on November 28, 2024 and sell it today you would lose (75.00) from holding National Bank Holdings or give up 1.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FS Bancorp vs. National Bank Holdings
Performance |
| Timeline |
| FS Bancorp |
| National Bank Holdings |
FS Bancorp and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FS Bancorp and National Bank
The main advantage of trading using opposite FS Bancorp and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FS Bancorp position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank'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 |
| National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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