Correlation Between Finward Bancorp and Finwise Bancorp

Can any of the company-specific risk be diversified away by investing in both Finward Bancorp and Finwise 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 Finwise 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 Finwise Bancorp, you can compare the effects of market volatilities on Finward Bancorp and Finwise 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 Finwise Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finward Bancorp and Finwise Bancorp.

Diversification Opportunities for Finward Bancorp and Finwise Bancorp

0.69

Correlation Coefficient

Finward Bancorp  Finwise Bancorp

Poor diversification

The 3 months correlation between Finward and Finwise is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Finwise Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finwise 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 Finwise Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finwise Bancorp has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and Finwise Bancorp go up and down completely randomly.

Pair Corralation between Finward Bancorp and Finwise Bancorp

Given the investment horizon of 90 days Finward Bancorp is expected to generate 2.54 times less return on investment than Finwise Bancorp. In addition to that, Finward Bancorp is 1.03 times more volatile than Finwise Bancorp. It trades about 0.13 of its total potential returns per unit of risk. Finwise Bancorp is currently generating about 0.34 per unit of volatility. If you would invest  1,287  in Finwise Bancorp on September 3, 2024 and sell it today you would earn a total of  571.00  from holding Finwise Bancorp or generate 44.37% return on investment over 90 days.

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

Finward Bancorp  vs.  Finwise Bancorp

Finward Bancorp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Finward Bancorp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Finward Bancorp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Finwise Bancorp

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Finwise Bancorp are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Finwise Bancorp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Finward Bancorp and Finwise Bancorp

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

The idea behind Finward Bancorp and Finwise 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.