Correlation Between Heritage Financial and Bankwell Financial
Can any of the company-specific risk be diversified away by investing in both Heritage Financial and Bankwell 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 Heritage Financial and Bankwell Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage Financial and Bankwell Financial Group, you can compare the effects of market volatilities on Heritage Financial and Bankwell 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 Heritage Financial with a short position of Bankwell Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Financial and Bankwell Financial.
Diversification Opportunities for Heritage Financial and Bankwell Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heritage and Bankwell is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Financial and Bankwell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankwell Financial and Heritage Financial 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 Heritage Financial are associated (or correlated) with Bankwell Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankwell Financial has no effect on the direction of Heritage Financial i.e., Heritage Financial and Bankwell Financial go up and down completely randomly.
Pair Corralation between Heritage Financial and Bankwell Financial
Given the investment horizon of 90 days Heritage Financial is expected to generate 3.21 times less return on investment than Bankwell Financial. In addition to that, Heritage Financial is 1.1 times more volatile than Bankwell Financial Group. It trades about 0.01 of its total potential returns per unit of risk. Bankwell Financial Group is currently generating about 0.04 per unit of volatility. If you would invest 2,693 in Bankwell Financial Group on August 28, 2024 and sell it today you would earn a total of 761.00 from holding Bankwell Financial Group or generate 28.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heritage Financial vs. Bankwell Financial Group
Performance |
| Timeline |
| Heritage Financial |
| Bankwell Financial |
Heritage Financial and Bankwell Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage Financial and Bankwell Financial
The main advantage of trading using opposite Heritage Financial and Bankwell Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Financial position performs unexpectedly, Bankwell 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 Bankwell Financial will offset losses from the drop in Bankwell Financial's long position.| Heritage Financial vs. Fifth Third Bancorp | Heritage Financial vs. Huntington Bancshares Incorporated | Heritage Financial vs. MT Bank |
| Bankwell Financial vs. Fifth Third Bancorp | Bankwell Financial vs. Huntington Bancshares Incorporated | Bankwell Financial vs. MT Bank |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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