Correlation Between Finward Bancorp and Amalgamated Bank

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

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

Diversification Opportunities for Finward Bancorp and Amalgamated Bank

0.05

Correlation Coefficient

Finward Bancorp  Amalgamated Bank

Significant diversification

The 3 months correlation between Finward and Amalgamated is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Amalgamated Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amalgamated Bank and Finward 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 Finward Bancorp are associated (or correlated) with Amalgamated Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amalgamated Bank has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and Amalgamated Bank go up and down completely randomly.

Pair Corralation between Finward Bancorp and Amalgamated Bank

Given the investment horizon of 90 days Finward Bancorp is expected to under-perform the Amalgamated Bank. In addition to that, Finward Bancorp is 1.43 times more volatile than Amalgamated Bank. It trades about -0.23 of its total potential returns per unit of risk. Amalgamated Bank is currently generating about -0.24 per unit of volatility. If you would invest  3,539  in Amalgamated Bank on October 10, 2024 and sell it today you would lose (229.00) from holding Amalgamated Bank or give up 6.47% of portfolio value over 90 days.

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

Finward Bancorp  vs.  Amalgamated Bank

Finward Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Finward Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Amalgamated Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amalgamated Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Amalgamated Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Finward Bancorp and Amalgamated Bank

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

The idea behind Finward Bancorp and Amalgamated Bank 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.