Correlation Between FS Bancorp and Commercial National

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

By analyzing existing cross correlation between FS Bancorp and Commercial National Financial, you can compare the effects of market volatilities on FS Bancorp and Commercial National 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 FS Bancorp with a short position of Commercial National. Check out your portfolio center. Please also check ongoing floating volatility patterns of FS Bancorp and Commercial National.

Diversification Opportunities for FS Bancorp and Commercial National

0.45

Correlation Coefficient

FS Bancorp  Commercial National

Very weak diversification

The 3 months correlation between FXLG and Commercial is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding FS Bancorp and Commercial National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial National and FS 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 FS Bancorp are associated (or correlated) with Commercial National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial National has no effect on the direction of FS Bancorp i.e., FS Bancorp and Commercial National go up and down completely randomly.

Pair Corralation between FS Bancorp and Commercial National

Given the investment horizon of 90 days FS Bancorp is expected to generate 0.31 times more return on investment than Commercial National. However, FS Bancorp is 3.21 times less risky than Commercial National. It trades about 0.23 of its potential returns per unit of risk. Commercial National Financial is currently generating about 0.02 per unit of risk. If you would invest  3,180  in FS Bancorp on December 26, 2024 and sell it today you would earn a total of  245.00  from holding FS Bancorp or generate 7.7% return on investment over 90 days.

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

FS Bancorp  vs.  Commercial National Financial

FS Bancorp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FS Bancorp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, FS Bancorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Commercial National

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial National Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Commercial National is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FS Bancorp and Commercial National

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

The idea behind FS Bancorp and Commercial National Financial 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.