Correlation Between FS Bancorp and Sturgis Bancorp

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

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

Diversification Opportunities for FS Bancorp and Sturgis Bancorp

-0.53

Correlation Coefficient

FS Bancorp  Sturgis Bancorp

Excellent diversification

The 3 months correlation between FXLG and Sturgis is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding FS Bancorp and Sturgis Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sturgis Bancorp 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 Sturgis Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sturgis Bancorp has no effect on the direction of FS Bancorp i.e., FS Bancorp and Sturgis Bancorp go up and down completely randomly.

Pair Corralation between FS Bancorp and Sturgis Bancorp

If you would invest  3,099  in FS Bancorp on September 5, 2024 and sell it today you would earn a total of  6.00  from holding FS Bancorp or generate 0.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

FS Bancorp  vs.  Sturgis Bancorp

FS Bancorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FS Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, FS Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Sturgis Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sturgis Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Sturgis Bancorp is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with FS Bancorp and Sturgis Bancorp

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

The idea behind FS Bancorp and Sturgis 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 Anywhere module to track or share privately all of your investments from the convenience of any device.