Correlation Between FS Bancorp and Oxford Bank
Can any of the company-specific risk be diversified away by investing in both FS Bancorp and Oxford 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 Oxford 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 Oxford Bank, you can compare the effects of market volatilities on FS Bancorp and Oxford 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 Oxford Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of FS Bancorp and Oxford Bank.
Diversification Opportunities for FS Bancorp and Oxford Bank
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FXLG and Oxford is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding FS Bancorp and Oxford Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Bank 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 Oxford Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Bank has no effect on the direction of FS Bancorp i.e., FS Bancorp and Oxford Bank go up and down completely randomly.
Pair Corralation between FS Bancorp and Oxford Bank
Given the investment horizon of 90 days FS Bancorp is expected to generate 0.51 times more return on investment than Oxford Bank. However, FS Bancorp is 1.96 times less risky than Oxford Bank. It trades about 0.25 of its potential returns per unit of risk. Oxford Bank is currently generating about 0.12 per unit of risk. If you would invest 3,050 in FS Bancorp on August 29, 2024 and sell it today you would earn a total of 100.00 from holding FS Bancorp or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FS Bancorp vs. Oxford Bank
Performance |
| Timeline |
| FS Bancorp |
| Oxford Bank |
FS Bancorp and Oxford Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FS Bancorp and Oxford Bank
The main advantage of trading using opposite FS Bancorp and Oxford Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FS Bancorp position performs unexpectedly, Oxford 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 Oxford Bank will offset losses from the drop in Oxford Bank'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 |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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