Correlation Between Finwise Bancorp and Hennessy Capital

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

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

Diversification Opportunities for Finwise Bancorp and Hennessy Capital

-0.08

Correlation Coefficient

Finwise Bancorp  Hennessy Capital

Good diversification

The 3 months correlation between Finwise and Hennessy is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Finwise Bancorp and Hennessy Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Capital Inv and Finwise Bancorp 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 Finwise Bancorp are associated (or correlated) with Hennessy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Capital Inv has no effect on the direction of Finwise Bancorp i.e., Finwise Bancorp and Hennessy Capital go up and down completely randomly.

Pair Corralation between Finwise Bancorp and Hennessy Capital

Given the investment horizon of 90 days Finwise Bancorp is expected to generate 32.03 times more return on investment than Hennessy Capital. However, Finwise Bancorp is 32.03 times more volatile than Hennessy Capital Investment. It trades about 0.02 of its potential returns per unit of risk. Hennessy Capital Investment is currently generating about 0.08 per unit of risk. If you would invest  1,620  in Finwise Bancorp on October 26, 2024 and sell it today you would earn a total of  27.00  from holding Finwise Bancorp or generate 1.67% return on investment over 90 days.

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

Finwise Bancorp  vs.  Hennessy Capital Investment

Finwise Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Finwise Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Finwise Bancorp is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Hennessy Capital Inv

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Capital Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Hennessy Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Finwise Bancorp and Hennessy Capital

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

The idea behind Finwise Bancorp and Hennessy Capital Investment 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.