Correlation Between Hilltop Holdings and FB Financial
Can any of the company-specific risk be diversified away by investing in both Hilltop Holdings and FB 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 Hilltop Holdings and FB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilltop Holdings and FB Financial Corp, you can compare the effects of market volatilities on Hilltop Holdings and FB 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 Hilltop Holdings with a short position of FB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilltop Holdings and FB Financial.
Diversification Opportunities for Hilltop Holdings and FB Financial
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hilltop and FBK is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hilltop Holdings and FB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FB Financial Corp and Hilltop Holdings 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 Hilltop Holdings are associated (or correlated) with FB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FB Financial Corp has no effect on the direction of Hilltop Holdings i.e., Hilltop Holdings and FB Financial go up and down completely randomly.
Pair Corralation between Hilltop Holdings and FB Financial
Considering the 90-day investment horizon Hilltop Holdings is expected to generate 3.39 times less return on investment than FB Financial. But when comparing it to its historical volatility, Hilltop Holdings is 1.35 times less risky than FB Financial. It trades about 0.08 of its potential returns per unit of risk. FB Financial Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,903 in FB Financial Corp on September 1, 2024 and sell it today you would earn a total of 742.00 from holding FB Financial Corp or generate 15.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilltop Holdings vs. FB Financial Corp
Performance |
| Timeline |
| Hilltop Holdings |
| FB Financial Corp |
Hilltop Holdings and FB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilltop Holdings and FB Financial
The main advantage of trading using opposite Hilltop Holdings and FB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilltop Holdings position performs unexpectedly, FB 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 FB Financial will offset losses from the drop in FB Financial's long position.| Hilltop Holdings vs. Home Federal Bancorp | Hilltop Holdings vs. First Financial Northwest | Hilltop Holdings vs. First Northwest Bancorp | Hilltop Holdings vs. First Capital |
| FB Financial vs. Affinity Bancshares | FB Financial vs. Southern California Bancorp | FB Financial vs. Auburn National Bancorporation | FB Financial vs. BayCom Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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