Correlation Between Peoples Bancorp and Bankwell Financial
Can any of the company-specific risk be diversified away by investing in both Peoples Bancorp 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 Peoples Bancorp and Bankwell Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peoples Bancorp and Bankwell Financial Group, you can compare the effects of market volatilities on Peoples Bancorp 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 Peoples Bancorp with a short position of Bankwell Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peoples Bancorp and Bankwell Financial.
Diversification Opportunities for Peoples Bancorp and Bankwell Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Peoples and Bankwell is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Bancorp and Bankwell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankwell Financial and Peoples 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 Peoples Bancorp 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 Peoples Bancorp i.e., Peoples Bancorp and Bankwell Financial go up and down completely randomly.
Pair Corralation between Peoples Bancorp and Bankwell Financial
Given the investment horizon of 90 days Peoples Bancorp is expected to generate 0.91 times more return on investment than Bankwell Financial. However, Peoples Bancorp is 1.1 times less risky than Bankwell Financial. It trades about 0.05 of its potential returns per unit of risk. Bankwell Financial Group is currently generating about 0.03 per unit of risk. If you would invest 2,545 in Peoples Bancorp on August 31, 2024 and sell it today you would earn a total of 963.00 from holding Peoples Bancorp or generate 37.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peoples Bancorp vs. Bankwell Financial Group
Performance |
| Timeline |
| Peoples Bancorp |
| Bankwell Financial |
Peoples Bancorp and Bankwell Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peoples Bancorp and Bankwell Financial
The main advantage of trading using opposite Peoples Bancorp and Bankwell Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peoples Bancorp 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.| Peoples Bancorp vs. Eagle Bancorp | Peoples Bancorp vs. Northrim BanCorp | Peoples Bancorp vs. United Bankshares | Peoples Bancorp vs. Pacific Premier 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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