Correlation Between Fentura Financial and Parkway Acquisition

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

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

Diversification Opportunities for Fentura Financial and Parkway Acquisition

0.0

Correlation Coefficient

Fentura Financial  Parkway Acquisition

Pay attention - limited upside

The 3 months correlation between Fentura and Parkway is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fentura Financial and Parkway Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parkway Acquisition Corp and Fentura 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 Fentura Financial are associated (or correlated) with Parkway Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parkway Acquisition Corp has no effect on the direction of Fentura Financial i.e., Fentura Financial and Parkway Acquisition go up and down completely randomly.

Pair Corralation between Fentura Financial and Parkway Acquisition

If you would invest  4,360  in Fentura Financial on October 20, 2024 and sell it today you would earn a total of  10.00  from holding Fentura Financial or generate 0.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Fentura Financial  vs.  Parkway Acquisition Corp

Fentura Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fentura Financial are ranked lower than 8 (%) 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.

Parkway Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Parkway Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward-looking signals, Parkway Acquisition is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fentura Financial and Parkway Acquisition

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

The idea behind Fentura Financial and Parkway Acquisition Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.