Correlation Between FVCBankcorp and Kearny Financial

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

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

Diversification Opportunities for FVCBankcorp and Kearny Financial

0.72

Correlation Coefficient

FVCBankcorp  Kearny Financial

Poor diversification

The 3 months correlation between FVCBankcorp and Kearny is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding FVCBankcorp and Kearny Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kearny Financial 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 Kearny Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kearny Financial Corp has no effect on the direction of FVCBankcorp i.e., FVCBankcorp and Kearny Financial go up and down completely randomly.

Pair Corralation between FVCBankcorp and Kearny Financial

Given the investment horizon of 90 days FVCBankcorp is expected to generate 0.81 times more return on investment than Kearny Financial. However, FVCBankcorp is 1.24 times less risky than Kearny Financial. It trades about 0.15 of its potential returns per unit of risk. Kearny Financial Corp is currently generating about 0.11 per unit of risk. If you would invest  1,156  in FVCBankcorp on September 2, 2024 and sell it today you would earn a total of  282.00  from holding FVCBankcorp or generate 24.39% return on investment over 90 days.

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

FVCBankcorp  vs.  Kearny Financial Corp

FVCBankcorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FVCBankcorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, FVCBankcorp sustained solid returns over the last few months and may actually be approaching a breakup point.

Kearny Financial Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kearny Financial Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kearny Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FVCBankcorp and Kearny Financial

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

The idea behind FVCBankcorp and Kearny Financial 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.