Correlation Between Bankwell Financial and First Commonwealth
Can any of the company-specific risk be diversified away by investing in both Bankwell Financial and First Commonwealth 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 First Commonwealth 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 First Commonwealth Financial, you can compare the effects of market volatilities on Bankwell Financial and First Commonwealth 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 First Commonwealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankwell Financial and First Commonwealth.
Diversification Opportunities for Bankwell Financial and First Commonwealth
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bankwell and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bankwell Financial Group and First Commonwealth Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Commonwealth 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 First Commonwealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Commonwealth has no effect on the direction of Bankwell Financial i.e., Bankwell Financial and First Commonwealth go up and down completely randomly.
Pair Corralation between Bankwell Financial and First Commonwealth
Given the investment horizon of 90 days Bankwell Financial Group is expected to generate 0.94 times more return on investment than First Commonwealth. However, Bankwell Financial Group is 1.07 times less risky than First Commonwealth. It trades about 0.1 of its potential returns per unit of risk. First Commonwealth Financial is currently generating about 0.09 per unit of risk. If you would invest 2,892 in Bankwell Financial Group on September 7, 2024 and sell it today you would earn a total of 410.00 from holding Bankwell Financial Group or generate 14.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Bankwell Financial Group vs. First Commonwealth Financial
Performance |
Timeline |
Bankwell Financial |
First Commonwealth |
Bankwell Financial and First Commonwealth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bankwell Financial and First Commonwealth
The main advantage of trading using opposite Bankwell Financial and First Commonwealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankwell Financial position performs unexpectedly, First Commonwealth 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 First Commonwealth will offset losses from the drop in First Commonwealth's long position.Bankwell Financial vs. Heritage Commerce Corp | Bankwell Financial vs. Business First Bancshares | Bankwell Financial vs. German American Bancorp | Bankwell Financial vs. Texas Capital Bancshares |
First Commonwealth vs. Heritage Commerce Corp | First Commonwealth vs. Business First Bancshares | First Commonwealth vs. German American Bancorp | First Commonwealth vs. Texas Capital Bancshares |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data |