Correlation Between Finwise Bancorp and Lake Shore

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

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

Diversification Opportunities for Finwise Bancorp and Lake Shore

0.31

Correlation Coefficient

Finwise Bancorp  Lake Shore

Weak diversification

The 3 months correlation between Finwise and Lake is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Finwise Bancorp and Lake Shore Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Shore Bancorp 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 Lake Shore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Shore Bancorp has no effect on the direction of Finwise Bancorp i.e., Finwise Bancorp and Lake Shore go up and down completely randomly.

Pair Corralation between Finwise Bancorp and Lake Shore

Given the investment horizon of 90 days Finwise Bancorp is expected to under-perform the Lake Shore. In addition to that, Finwise Bancorp is 1.27 times more volatile than Lake Shore Bancorp. It trades about -0.11 of its total potential returns per unit of risk. Lake Shore Bancorp is currently generating about -0.04 per unit of volatility. If you would invest  1,367  in Lake Shore Bancorp on October 11, 2024 and sell it today you would lose (26.00) from holding Lake Shore Bancorp or give up 1.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	75.0%
Values	Daily Returns

Finwise Bancorp  vs.  Lake Shore Bancorp

Finwise Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Finwise Bancorp are ranked lower than 3 (%) 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.

Lake Shore Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lake Shore Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Lake Shore is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Finwise Bancorp and Lake Shore

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

The idea behind Finwise Bancorp and Lake Shore 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 CEOs Directory module to screen CEOs from public companies around the world.