Correlation Between FB Financial and BankUnited
Can any of the company-specific risk be diversified away by investing in both FB Financial and BankUnited 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 FB Financial and BankUnited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FB Financial Corp and BankUnited, you can compare the effects of market volatilities on FB Financial and BankUnited 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 FB Financial with a short position of BankUnited. Check out your portfolio center. Please also check ongoing floating volatility patterns of FB Financial and BankUnited.
Diversification Opportunities for FB Financial and BankUnited
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FBK and BankUnited is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding FB Financial Corp and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited and FB 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 FB Financial Corp are associated (or correlated) with BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of FB Financial i.e., FB Financial and BankUnited go up and down completely randomly.
Pair Corralation between FB Financial and BankUnited
Considering the 90-day investment horizon FB Financial Corp is expected to generate 1.07 times more return on investment than BankUnited. However, FB Financial is 1.07 times more volatile than BankUnited. It trades about -0.26 of its potential returns per unit of risk. BankUnited is currently generating about -0.35 per unit of risk. If you would invest 5,725 in FB Financial Corp on September 25, 2024 and sell it today you would lose (490.00) from holding FB Financial Corp or give up 8.56% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
FB Financial Corp vs. BankUnited
Performance |
Timeline |
FB Financial Corp |
BankUnited |
FB Financial and BankUnited Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FB Financial and BankUnited
The main advantage of trading using opposite FB Financial and BankUnited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FB Financial position performs unexpectedly, BankUnited 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 BankUnited will offset losses from the drop in BankUnited's long position.The idea behind FB Financial Corp and BankUnited 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.BankUnited vs. International Bancshares | BankUnited vs. Hilltop Holdings | BankUnited vs. FB Financial Corp | BankUnited vs. Red River 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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