Correlation Between Waterstone Financial and Finward Bancorp
Can any of the company-specific risk be diversified away by investing in both Waterstone 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 Waterstone 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 Waterstone Financial and Finward Bancorp, you can compare the effects of market volatilities on Waterstone 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 Waterstone Financial with a short position of Finward Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waterstone Financial and Finward Bancorp.
Diversification Opportunities for Waterstone Financial and Finward Bancorp
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Waterstone and Finward is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Waterstone Financial and Finward Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finward Bancorp and Waterstone 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 Waterstone Financial 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 Waterstone Financial i.e., Waterstone Financial and Finward Bancorp go up and down completely randomly.
Pair Corralation between Waterstone Financial and Finward Bancorp
Given the investment horizon of 90 days Waterstone Financial is expected to generate 1.64 times more return on investment than Finward Bancorp. However, Waterstone Financial is 1.64 times more volatile than Finward Bancorp. It trades about 0.03 of its potential returns per unit of risk. Finward Bancorp is currently generating about 0.03 per unit of risk. If you would invest 1,261 in Waterstone Financial on November 9, 2024 and sell it today you would earn a total of 113.00 from holding Waterstone Financial or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waterstone Financial vs. Finward Bancorp
Performance |
| Timeline |
| Waterstone Financial |
| Finward Bancorp |
Waterstone Financial and Finward Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waterstone Financial and Finward Bancorp
The main advantage of trading using opposite Waterstone Financial and Finward Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waterstone 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.| Waterstone Financial vs. National Bank Holdings | Waterstone Financial vs. Community West Bancshares | Waterstone Financial vs. Financial Institutions | Waterstone Financial vs. Kearny Financial Corp |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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