Correlation Between FVCBankcorp and Investar Holding

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

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

Diversification Opportunities for FVCBankcorp and Investar Holding

0.83

Correlation Coefficient

FVCBankcorp  Investar Holding

Very poor diversification

The 3 months correlation between FVCBankcorp and Investar is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding FVCBankcorp and Investar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investar Holding Corp and FVCBankcorp 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 FVCBankcorp are associated (or correlated) with Investar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investar Holding Corp has no effect on the direction of FVCBankcorp i.e., FVCBankcorp and Investar Holding go up and down completely randomly.

Pair Corralation between FVCBankcorp and Investar Holding

Given the investment horizon of 90 days FVCBankcorp is expected to generate 1.89 times more return on investment than Investar Holding. However, FVCBankcorp is 1.89 times more volatile than Investar Holding Corp. It trades about -0.07 of its potential returns per unit of risk. Investar Holding Corp is currently generating about -0.19 per unit of risk. If you would invest  1,257  in FVCBankcorp on December 31, 2024 and sell it today you would lose (191.00) from holding FVCBankcorp or give up 15.19% of portfolio value over 90 days.

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

FVCBankcorp  vs.  Investar Holding Corp

FVCBankcorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days FVCBankcorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Investar Holding Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Investar Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with FVCBankcorp and Investar Holding

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

The idea behind FVCBankcorp and Investar Holding Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.