Correlation Between Tectonic Financial and Finward Bancorp
Can any of the company-specific risk be diversified away by investing in both Tectonic Financial and Finward Bancorp 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 Tectonic Financial and Finward Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tectonic Financial PR and Finward Bancorp, you can compare the effects of market volatilities on Tectonic Financial and Finward Bancorp 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 Tectonic Financial with a short position of Finward Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tectonic Financial and Finward Bancorp.
Diversification Opportunities for Tectonic Financial and Finward Bancorp
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tectonic and Finward is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR and Finward Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finward Bancorp and Tectonic 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 Tectonic Financial PR are associated (or correlated) with Finward Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finward Bancorp has no effect on the direction of Tectonic Financial i.e., Tectonic Financial and Finward Bancorp go up and down completely randomly.
Pair Corralation between Tectonic Financial and Finward Bancorp
Assuming the 90 days horizon Tectonic Financial is expected to generate 2.95 times less return on investment than Finward Bancorp. But when comparing it to its historical volatility, Tectonic Financial PR is 3.15 times less risky than Finward Bancorp. It trades about 0.07 of its potential returns per unit of risk. Finward Bancorp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,981 in Finward Bancorp on August 27, 2024 and sell it today you would earn a total of 1,094 from holding Finward Bancorp or generate 55.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tectonic Financial PR vs. Finward Bancorp
Performance |
| Timeline |
| Tectonic Financial |
| Finward Bancorp |
Tectonic Financial and Finward Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tectonic Financial and Finward Bancorp
The main advantage of trading using opposite Tectonic Financial and Finward Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tectonic Financial position performs unexpectedly, Finward Bancorp 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 Finward Bancorp will offset losses from the drop in Finward Bancorp's long position.| Tectonic Financial vs. First Guaranty Bancshares | Tectonic Financial vs. First Merchants | Tectonic Financial vs. Associated Banc Corp | Tectonic Financial vs. Absa Group Limited |
| Finward Bancorp vs. Community West Bancshares | Finward Bancorp vs. First Financial Northwest | Finward Bancorp vs. Oak Valley Bancorp | Finward Bancorp vs. Home Federal 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 Stocks Directory module to find actively traded stocks across global markets.
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