Correlation Between Bankwell Financial and Blue Ridge

Can any of the company-specific risk be diversified away by investing in both Bankwell Financial and Blue Ridge 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 Bankwell Financial and Blue Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bankwell Financial Group and Blue Ridge Bankshares, you can compare the effects of market volatilities on Bankwell Financial and Blue Ridge 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 Bankwell Financial with a short position of Blue Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankwell Financial and Blue Ridge.

Diversification Opportunities for Bankwell Financial and Blue Ridge

0.6

Correlation Coefficient

Bankwell Financial  Blue Ridge

Poor diversification

The 3 months correlation between Bankwell and Blue is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bankwell Financial Group and Blue Ridge Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Ridge Bankshares and Bankwell 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 Bankwell Financial Group are associated (or correlated) with Blue Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Ridge Bankshares has no effect on the direction of Bankwell Financial i.e., Bankwell Financial and Blue Ridge go up and down completely randomly.

Pair Corralation between Bankwell Financial and Blue Ridge

Given the investment horizon of 90 days Bankwell Financial Group is expected to under-perform the Blue Ridge. In addition to that, Bankwell Financial is 1.03 times more volatile than Blue Ridge Bankshares. It trades about 0.0 of its total potential returns per unit of risk. Blue Ridge Bankshares is currently generating about 0.03 per unit of volatility. If you would invest  319.00  in Blue Ridge Bankshares on December 29, 2024 and sell it today you would earn a total of  9.00  from holding Blue Ridge Bankshares or generate 2.82% return on investment over 90 days.

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

Bankwell Financial Group  vs.  Blue Ridge Bankshares

Bankwell Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bankwell Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Bankwell Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Blue Ridge Bankshares

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Ridge Bankshares are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Blue Ridge is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bankwell Financial and Blue Ridge

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

The idea behind Bankwell Financial Group and Blue Ridge Bankshares 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.