Correlation Between Luther Burbank and Bankwell Financial
Can any of the company-specific risk be diversified away by investing in both Luther Burbank 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 Luther Burbank and Bankwell Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luther Burbank and Bankwell Financial Group, you can compare the effects of market volatilities on Luther Burbank 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 Luther Burbank with a short position of Bankwell Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luther Burbank and Bankwell Financial.
Diversification Opportunities for Luther Burbank and Bankwell Financial
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Luther and Bankwell is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Luther Burbank and Bankwell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankwell Financial and Luther Burbank 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 Luther Burbank 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 Luther Burbank i.e., Luther Burbank and Bankwell Financial go up and down completely randomly.
Pair Corralation between Luther Burbank and Bankwell Financial
If you would invest 2,833 in Bankwell Financial Group on September 1, 2024 and sell it today you would earn a total of 482.00 from holding Bankwell Financial Group or generate 17.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Luther Burbank vs. Bankwell Financial Group
Performance |
| Timeline |
| Luther Burbank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Bankwell Financial |
Luther Burbank and Bankwell Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luther Burbank and Bankwell Financial
The main advantage of trading using opposite Luther Burbank and Bankwell Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luther Burbank 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.| Luther Burbank vs. First Community | Luther Burbank vs. Community West Bancshares | Luther Burbank vs. First Financial Northwest | Luther Burbank vs. First Northwest Bancorp |
| Bankwell Financial vs. Franklin Financial Services | Bankwell Financial vs. The First Bancshares, | Bankwell Financial vs. Home Federal Bancorp | Bankwell Financial vs. Lake Shore Bancorp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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