Correlation Between Virginia National and FS Bancorp
Can any of the company-specific risk be diversified away by investing in both Virginia National and FS 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 Virginia National and FS Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virginia National Bankshares and FS Bancorp, you can compare the effects of market volatilities on Virginia National and FS 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 Virginia National with a short position of FS Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and FS Bancorp.
Diversification Opportunities for Virginia National and FS Bancorp
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virginia and FSBW is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Bancorp and Virginia National 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 Virginia National Bankshares are associated (or correlated) with FS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Bancorp has no effect on the direction of Virginia National i.e., Virginia National and FS Bancorp go up and down completely randomly.
Pair Corralation between Virginia National and FS Bancorp
Given the investment horizon of 90 days Virginia National is expected to generate 1.81 times less return on investment than FS Bancorp. But when comparing it to its historical volatility, Virginia National Bankshares is 1.46 times less risky than FS Bancorp. It trades about 0.1 of its potential returns per unit of risk. FS Bancorp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,480 in FS Bancorp on August 28, 2024 and sell it today you would earn a total of 280.00 from holding FS Bancorp or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virginia National Bankshares vs. FS Bancorp
Performance |
| Timeline |
| Virginia National |
| FS Bancorp |
Virginia National and FS Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virginia National and FS Bancorp
The main advantage of trading using opposite Virginia National and FS Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National position performs unexpectedly, FS 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 FS Bancorp will offset losses from the drop in FS Bancorp's long position.| Virginia National vs. Fifth Third Bancorp | Virginia National vs. Zions Bancorporation | Virginia National vs. Huntington Bancshares Incorporated | Virginia National vs. Comerica |
| FS Bancorp vs. First Community | FS Bancorp vs. Oak Valley Bancorp | FS Bancorp vs. First Financial Northwest | FS Bancorp vs. ESSA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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