Correlation Between FS Bancorp and Century Financial
Can any of the company-specific risk be diversified away by investing in both FS Bancorp and Century 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 Century 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 Century Financial Corp, you can compare the effects of market volatilities on FS Bancorp and Century 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 Century Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of FS Bancorp and Century Financial.
Diversification Opportunities for FS Bancorp and Century Financial
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FXLG and Century is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding FS Bancorp and Century Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Financial Corp 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 Century Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Financial Corp has no effect on the direction of FS Bancorp i.e., FS Bancorp and Century Financial go up and down completely randomly.
Pair Corralation between FS Bancorp and Century Financial
Given the investment horizon of 90 days FS Bancorp is expected to generate 7.89 times less return on investment than Century Financial. But when comparing it to its historical volatility, FS Bancorp is 6.0 times less risky than Century Financial. It trades about 0.21 of its potential returns per unit of risk. Century Financial Corp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,300 in Century Financial Corp on August 29, 2024 and sell it today you would earn a total of 450.00 from holding Century Financial Corp or generate 13.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
FS Bancorp vs. Century Financial Corp
Performance |
| Timeline |
| FS Bancorp |
| Century Financial Corp |
FS Bancorp and Century Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FS Bancorp and Century Financial
The main advantage of trading using opposite FS Bancorp and Century Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FS Bancorp position performs unexpectedly, Century 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 Century Financial will offset losses from the drop in Century Financial's long position.| FS Bancorp vs. Eastern Michigan Financial | FS Bancorp vs. Grand River Commerce | FS Bancorp vs. Bank of Botetourt | FS Bancorp vs. AmeriServ Financial |
| Century Financial vs. Invesco High Income | Century Financial vs. Blackrock Muniholdings Ny | Century Financial vs. Nuveen California Select | Century Financial vs. MFS Investment Grade |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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