Correlation Between Affinity Bancshares and Business First

Can any of the company-specific risk be diversified away by investing in both Affinity Bancshares and Business First 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 Affinity Bancshares and Business First into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Affinity Bancshares and Business First Bancshares, you can compare the effects of market volatilities on Affinity Bancshares and Business First 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 Affinity Bancshares with a short position of Business First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affinity Bancshares and Business First.

Diversification Opportunities for Affinity Bancshares and Business First

-0.05

Correlation Coefficient

Affinity Bancshares  Business First

Good diversification

The 3 months correlation between Affinity and Business is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and Business First Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Business First Bancshares and Affinity Bancshares 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 Affinity Bancshares are associated (or correlated) with Business First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Business First Bancshares has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and Business First go up and down completely randomly.

Pair Corralation between Affinity Bancshares and Business First

Given the investment horizon of 90 days Affinity Bancshares is expected to under-perform the Business First. In addition to that, Affinity Bancshares is 1.36 times more volatile than Business First Bancshares. It trades about -0.06 of its total potential returns per unit of risk. Business First Bancshares is currently generating about -0.03 per unit of volatility. If you would invest  2,560  in Business First Bancshares on December 30, 2024 and sell it today you would lose (112.00) from holding Business First Bancshares or give up 4.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Affinity Bancshares  vs.  Business First Bancshares

Affinity Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Affinity Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Business First Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Business First Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Business First is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Affinity Bancshares and Business First

The main advantage of trading using opposite Affinity Bancshares and Business First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affinity Bancshares position performs unexpectedly, Business First 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 Business First will offset losses from the drop in Business First's long position.

The idea behind Affinity Bancshares and Business First Bancshares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.