Correlation Between National Bankshares and Finward Bancorp
Can any of the company-specific risk be diversified away by investing in both National Bankshares 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 National Bankshares and Finward Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bankshares and Finward Bancorp, you can compare the effects of market volatilities on National Bankshares 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 National Bankshares with a short position of Finward Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bankshares and Finward Bancorp.
Diversification Opportunities for National Bankshares and Finward Bancorp
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Finward is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding National Bankshares and Finward Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finward Bancorp and National Bankshares 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 National Bankshares 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 National Bankshares i.e., National Bankshares and Finward Bancorp go up and down completely randomly.
Pair Corralation between National Bankshares and Finward Bancorp
Given the investment horizon of 90 days National Bankshares is expected to under-perform the Finward Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, National Bankshares is 1.16 times less risky than Finward Bancorp. The stock trades about -0.02 of its potential returns per unit of risk. The Finward Bancorp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,733 in Finward Bancorp on June 29, 2024 and sell it today you would earn a total of 465.00 from holding Finward Bancorp or generate 17.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
National Bankshares vs. Finward Bancorp
Performance |
Timeline |
National Bankshares |
Finward Bancorp |
National Bankshares and Finward Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Bankshares and Finward Bancorp
The main advantage of trading using opposite National Bankshares and Finward Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bankshares 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.National Bankshares vs. Finward Bancorp | National Bankshares vs. Community West Bancshares | National Bankshares vs. First Financial Northwest | National Bankshares vs. Oak Valley Bancorp |
Finward Bancorp vs. Community West Bancshares | Finward Bancorp vs. First Financial Northwest | Finward Bancorp vs. Oak Valley Bancorp | Finward Bancorp vs. HMN Financial |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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