Correlation Between Finward Bancorp and Carver Bancorp

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

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

Diversification Opportunities for Finward Bancorp and Carver Bancorp

-0.2

Correlation Coefficient

Finward Bancorp  Carver Bancorp

Good diversification

The 3 months correlation between Finward and Carver is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Carver Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carver Bancorp 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 Carver Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carver Bancorp has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and Carver Bancorp go up and down completely randomly.

Pair Corralation between Finward Bancorp and Carver Bancorp

Given the investment horizon of 90 days Finward Bancorp is expected to generate 0.49 times more return on investment than Carver Bancorp. However, Finward Bancorp is 2.05 times less risky than Carver Bancorp. It trades about -0.01 of its potential returns per unit of risk. Carver Bancorp is currently generating about -0.03 per unit of risk. If you would invest  3,417  in Finward Bancorp on October 3, 2024 and sell it today you would lose (606.00) from holding Finward Bancorp or give up 17.73% 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.  Carver Bancorp

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.

Carver Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carver Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Carver Bancorp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Finward Bancorp and Carver Bancorp

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

The idea behind Finward Bancorp and Carver 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.