Correlation Between Investar Holding and FVCBankcorp
Can any of the company-specific risk be diversified away by investing in both Investar Holding and FVCBankcorp 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 Investar Holding and FVCBankcorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investar Holding Corp and FVCBankcorp, you can compare the effects of market volatilities on Investar Holding and FVCBankcorp 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 Investar Holding with a short position of FVCBankcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investar Holding and FVCBankcorp.
Diversification Opportunities for Investar Holding and FVCBankcorp
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investar and FVCBankcorp is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Investar Holding Corp and FVCBankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FVCBankcorp and Investar Holding 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 Investar Holding Corp are associated (or correlated) with FVCBankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FVCBankcorp has no effect on the direction of Investar Holding i.e., Investar Holding and FVCBankcorp go up and down completely randomly.
Pair Corralation between Investar Holding and FVCBankcorp
Given the investment horizon of 90 days Investar Holding Corp is expected to under-perform the FVCBankcorp. But the stock apears to be less risky and, when comparing its historical volatility, Investar Holding Corp is 1.8 times less risky than FVCBankcorp. The stock trades about -0.18 of its potential returns per unit of risk. The FVCBankcorp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,212 in FVCBankcorp on October 22, 2024 and sell it today you would lose (31.00) from holding FVCBankcorp or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investar Holding Corp vs. FVCBankcorp
Performance |
| Timeline |
| Investar Holding Corp |
| FVCBankcorp |
Investar Holding and FVCBankcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investar Holding and FVCBankcorp
The main advantage of trading using opposite Investar Holding and FVCBankcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investar Holding position performs unexpectedly, FVCBankcorp 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 FVCBankcorp will offset losses from the drop in FVCBankcorp's long position.| Investar Holding vs. Magyar Bancorp | Investar Holding vs. Home Federal Bancorp | Investar Holding vs. Community West Bancshares | Investar Holding vs. First Northwest Bancorp |
| FVCBankcorp vs. Home Federal Bancorp | FVCBankcorp vs. First Financial Northwest | FVCBankcorp vs. First Northwest Bancorp | FVCBankcorp vs. First Capital |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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