Correlation Between Prosperity Bancshares and Ffbw

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

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

Diversification Opportunities for Prosperity Bancshares and Ffbw

0.72

Correlation Coefficient

Prosperity Bancshares  Ffbw

Poor diversification

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

Pair Corralation between Prosperity Bancshares and Ffbw

If you would invest  1,178  in Ffbw Inc on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Ffbw Inc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

Prosperity Bancshares  vs.  Ffbw Inc

Prosperity Bancshares

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prosperity Bancshares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Prosperity Bancshares is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ffbw Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ffbw Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental drivers, Ffbw is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Prosperity Bancshares and Ffbw

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

The idea behind Prosperity Bancshares and Ffbw Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.