Correlation Between Finward Bancorp and QCR Holdings

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

Diversification Opportunities for Finward Bancorp and QCR Holdings

-0.04

Correlation Coefficient

Finward Bancorp  QCR Holdings

Good diversification

The 3 months correlation between Finward and QCR is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and QCR Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QCR Holdings 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 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 Finward Bancorp i.e., Finward Bancorp and QCR Holdings go up and down completely randomly.

Pair Corralation between Finward Bancorp and QCR Holdings

Given the investment horizon of 90 days Finward Bancorp is expected to generate 1.15 times more return on investment than QCR Holdings. However, Finward Bancorp is 1.15 times more volatile than QCR Holdings. It trades about 0.03 of its potential returns per unit of risk. QCR Holdings is currently generating about -0.13 per unit of risk. If you would invest  2,866  in Finward Bancorp on December 27, 2024 and sell it today you would earn a total of  53.00  from holding Finward Bancorp or generate 1.85% return on investment over 90 days.

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

Finward Bancorp  vs.  QCR Holdings

Finward Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Finward Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Finward Bancorp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

QCR Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days QCR Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Finward Bancorp and QCR Holdings

The main advantage of trading using opposite Finward Bancorp and QCR Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finward 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 Finward 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.