Correlation Between Luther Burbank and First Business

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

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

Diversification Opportunities for Luther Burbank and First Business

0.0

Correlation Coefficient

Luther Burbank  First Business

Pay attention - limited upside

The 3 months correlation between Luther and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Luther Burbank and First Business Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Business Financial and Luther Burbank 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 Luther Burbank are associated (or correlated) with First Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Business Financial has no effect on the direction of Luther Burbank i.e., Luther Burbank and First Business go up and down completely randomly.

Pair Corralation between Luther Burbank and First Business

If you would invest  4,562  in First Business Financial on December 27, 2024 and sell it today you would earn a total of  324.00  from holding First Business Financial or generate 7.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Luther Burbank  vs.  First Business Financial

Luther Burbank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Luther Burbank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Luther Burbank is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

First Business Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Business Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting forward indicators, First Business may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Luther Burbank and First Business

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

The idea behind Luther Burbank and First Business 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.