Correlation Between LINKBANCORP and FB Financial

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

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

Diversification Opportunities for LINKBANCORP and FB Financial

0.94

Correlation Coefficient

LINKBANCORP  FB Financial

Almost no diversification

The 3 months correlation between LINKBANCORP and FBK is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding LINKBANCORP and FB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FB Financial Corp and LINKBANCORP 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 LINKBANCORP are associated (or correlated) with FB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FB Financial Corp has no effect on the direction of LINKBANCORP i.e., LINKBANCORP and FB Financial go up and down completely randomly.

Pair Corralation between LINKBANCORP and FB Financial

Given the investment horizon of 90 days LINKBANCORP is expected to generate 0.78 times more return on investment than FB Financial. However, LINKBANCORP is 1.28 times less risky than FB Financial. It trades about 0.16 of its potential returns per unit of risk. FB Financial Corp is currently generating about 0.12 per unit of risk. If you would invest  609.00  in LINKBANCORP on September 4, 2024 and sell it today you would earn a total of  135.00  from holding LINKBANCORP or generate 22.17% return on investment over 90 days.

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

LINKBANCORP  vs.  FB Financial Corp

LINKBANCORP

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LINKBANCORP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward-looking signals, LINKBANCORP sustained solid returns over the last few months and may actually be approaching a breakup point.

FB Financial Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FB Financial Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, FB Financial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LINKBANCORP and FB Financial

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

The idea behind LINKBANCORP and FB 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..