Correlation Between Finward Bancorp and Banner

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

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

Diversification Opportunities for Finward Bancorp and Banner

-0.02

Correlation Coefficient

Finward Bancorp  Banner

Good diversification

The 3 months correlation between Finward and Banner is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Banner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banner 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 Banner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banner has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and Banner go up and down completely randomly.

Pair Corralation between Finward Bancorp and Banner

Given the investment horizon of 90 days Finward Bancorp is expected to generate 1.08 times more return on investment than Banner. However, Finward Bancorp is 1.08 times more volatile than Banner. It trades about -0.23 of its potential returns per unit of risk. Banner is currently generating about -0.27 per unit of risk. If you would invest  3,090  in Finward Bancorp on October 10, 2024 and sell it today you would lose (275.00) from holding Finward Bancorp or give up 8.9% of portfolio value over 90 days.

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

Finward Bancorp  vs.  Banner

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.

Banner

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Banner are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Banner reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Finward Bancorp and Banner

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

The idea behind Finward Bancorp and Banner 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.