Correlation Between Coeur DAlene and Fentura Financial

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

By analyzing existing cross correlation between Coeur dAlene Bancorp and Fentura Financial, you can compare the effects of market volatilities on Coeur DAlene and Fentura Financial 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 Coeur DAlene with a short position of Fentura Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coeur DAlene and Fentura Financial.

Diversification Opportunities for Coeur DAlene and Fentura Financial

0.77

Correlation Coefficient

Coeur DAlene  Fentura Financial

Poor diversification

The 3 months correlation between Coeur and Fentura is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Coeur dAlene Bancorp and Fentura Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fentura Financial and Coeur DAlene 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 Coeur dAlene Bancorp are associated (or correlated) with Fentura Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fentura Financial has no effect on the direction of Coeur DAlene i.e., Coeur DAlene and Fentura Financial go up and down completely randomly.

Pair Corralation between Coeur DAlene and Fentura Financial

Given the investment horizon of 90 days Coeur DAlene is expected to generate 1.53 times less return on investment than Fentura Financial. But when comparing it to its historical volatility, Coeur dAlene Bancorp is 1.06 times less risky than Fentura Financial. It trades about 0.11 of its potential returns per unit of risk. Fentura Financial is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,890  in Fentura Financial on September 17, 2024 and sell it today you would earn a total of  720.00  from holding Fentura Financial or generate 18.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Coeur dAlene Bancorp  vs.  Fentura Financial

Coeur dAlene Bancorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coeur dAlene Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Coeur DAlene may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fentura Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fentura Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Fentura Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coeur DAlene and Fentura Financial

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

The idea behind Coeur dAlene Bancorp and Fentura Financial 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.