Correlation Between Commercial National and FS Bancorp

Can any of the company-specific risk be diversified away by investing in both Commercial National and FS Bancorp 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 Commercial National and FS Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Commercial National and FS Bancorp

0.4

Correlation Coefficient

Commercial National  FS Bancorp

Very weak diversification

The 3 months correlation between Commercial and FXLG is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Commercial National Financial and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Bancorp and Commercial National 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 Commercial National Financial are associated (or correlated) with FS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Bancorp has no effect on the direction of Commercial National i.e., Commercial National and FS Bancorp go up and down completely randomly.

Pair Corralation between Commercial National and FS Bancorp

Given the investment horizon of 90 days Commercial National is expected to generate 2.61 times less return on investment than FS Bancorp. In addition to that, Commercial National is 3.31 times more volatile than FS Bancorp. It trades about 0.03 of its total potential returns per unit of risk. FS Bancorp is currently generating about 0.23 per unit of volatility. If you would invest  3,180  in FS Bancorp on December 29, 2024 and sell it today you would earn a total of  245.00  from holding FS Bancorp or generate 7.7% return on investment over 90 days.

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

Commercial National Financial  vs.  FS Bancorp

Commercial National

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial National Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Commercial National is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

FS Bancorp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FS Bancorp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, FS Bancorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Commercial National and FS Bancorp

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

The idea behind Commercial National Financial and FS Bancorp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.