Correlation Between Bankwell Financial and Civista Bancshares
Can any of the company-specific risk be diversified away by investing in both Bankwell Financial and Civista Bancshares 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 Civista Bancshares 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 Civista Bancshares, you can compare the effects of market volatilities on Bankwell Financial and Civista Bancshares 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 Civista Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankwell Financial and Civista Bancshares.
Diversification Opportunities for Bankwell Financial and Civista Bancshares
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bankwell and Civista is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bankwell Financial Group and Civista Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civista Bancshares 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 Civista Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civista Bancshares has no effect on the direction of Bankwell Financial i.e., Bankwell Financial and Civista Bancshares go up and down completely randomly.
Pair Corralation between Bankwell Financial and Civista Bancshares
Given the investment horizon of 90 days Bankwell Financial is expected to generate 1.12 times less return on investment than Civista Bancshares. But when comparing it to its historical volatility, Bankwell Financial Group is 1.03 times less risky than Civista Bancshares. It trades about 0.06 of its potential returns per unit of risk. Civista Bancshares is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,411 in Civista Bancshares on September 7, 2024 and sell it today you would earn a total of 883.00 from holding Civista Bancshares or generate 62.58% 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. Civista Bancshares
Performance |
Timeline |
Bankwell Financial |
Civista Bancshares |
Bankwell Financial and Civista Bancshares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bankwell Financial and Civista Bancshares
The main advantage of trading using opposite Bankwell Financial and Civista Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankwell Financial position performs unexpectedly, Civista Bancshares 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 Civista Bancshares will offset losses from the drop in Civista Bancshares' long position.The idea behind Bankwell Financial Group and Civista 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.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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |