Correlation Between Finwise Bancorp and QCR Holdings

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

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

Diversification Opportunities for Finwise Bancorp and QCR Holdings

0.93

Correlation Coefficient

Finwise Bancorp  QCR Holdings

Almost no diversification

The 3 months correlation between Finwise and QCR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Finwise Bancorp and QCR Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QCR Holdings 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 QCR Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QCR Holdings has no effect on the direction of Finwise Bancorp i.e., Finwise Bancorp and QCR Holdings go up and down completely randomly.

Pair Corralation between Finwise Bancorp and QCR Holdings

Given the investment horizon of 90 days Finwise Bancorp is expected to generate 0.79 times more return on investment than QCR Holdings. However, Finwise Bancorp is 1.27 times less risky than QCR Holdings. It trades about 0.2 of its potential returns per unit of risk. QCR Holdings is currently generating about 0.15 per unit of risk. If you would invest  1,423  in Finwise Bancorp on September 13, 2024 and sell it today you would earn a total of  353.00  from holding Finwise Bancorp or generate 24.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Finwise Bancorp  vs.  QCR Holdings

Finwise Bancorp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Finwise Bancorp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Finwise Bancorp showed solid returns over the last few months and may actually be approaching a breakup point.

QCR Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in QCR Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, QCR Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Finwise Bancorp and QCR Holdings

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

The idea behind Finwise Bancorp and QCR Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.