Correlation Between Ffbw and Ottawa Savings

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

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

Diversification Opportunities for Ffbw and Ottawa Savings

0.35

Correlation Coefficient

Ffbw  Ottawa Savings

Weak diversification

The 3 months correlation between Ffbw and Ottawa is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ffbw Inc and Ottawa Savings Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ottawa Savings 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 Ottawa Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ottawa Savings Bancorp has no effect on the direction of Ffbw i.e., Ffbw and Ottawa Savings go up and down completely randomly.

Pair Corralation between Ffbw and Ottawa Savings

Given the investment horizon of 90 days Ffbw Inc is expected to under-perform the Ottawa Savings. In addition to that, Ffbw is 1.19 times more volatile than Ottawa Savings Bancorp. It trades about -0.08 of its total potential returns per unit of risk. Ottawa Savings Bancorp is currently generating about -0.04 per unit of volatility. If you would invest  1,295  in Ottawa Savings Bancorp on September 30, 2024 and sell it today you would lose (10.00) from holding Ottawa Savings Bancorp or give up 0.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.62%
Values	Daily Returns

Ffbw Inc  vs.  Ottawa Savings 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.

Ottawa Savings Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ffbw and Ottawa Savings

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

The idea behind Ffbw Inc and Ottawa Savings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..