Correlation Between Ffbw and Auburn Bancorp

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

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

Diversification Opportunities for Ffbw and Auburn Bancorp

-0.09

Correlation Coefficient

Ffbw  Auburn Bancorp

Good diversification

The 3 months correlation between Ffbw and Auburn is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ffbw Inc and Auburn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auburn Bancorp and Ffbw 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 Ffbw Inc are associated (or correlated) with Auburn Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auburn Bancorp has no effect on the direction of Ffbw i.e., Ffbw and Auburn Bancorp go up and down completely randomly.

Pair Corralation between Ffbw and Auburn Bancorp

If you would invest  835.00  in Auburn Bancorp on September 21, 2024 and sell it today you would earn a total of  16.00  from holding Auburn Bancorp or generate 1.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Ffbw Inc  vs.  Auburn Bancorp

Ffbw Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Auburn Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Auburn Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Auburn Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ffbw and Auburn Bancorp

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

The idea behind Ffbw Inc and Auburn 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.