Correlation Between Pacific Premier and FB Financial

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

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

Diversification Opportunities for Pacific Premier and FB Financial

0.79

Correlation Coefficient

Pacific Premier  FB Financial

Poor diversification

The 3 months correlation between Pacific and FBK is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Premier Bancorp 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 Pacific Premier 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 Pacific Premier Bancorp 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 Pacific Premier i.e., Pacific Premier and FB Financial go up and down completely randomly.

Pair Corralation between Pacific Premier and FB Financial

Given the investment horizon of 90 days Pacific Premier is expected to generate 15.84 times less return on investment than FB Financial. In addition to that, Pacific Premier is 1.1 times more volatile than FB Financial Corp. It trades about 0.0 of its total potential returns per unit of risk. FB Financial Corp is currently generating about 0.04 per unit of volatility. If you would invest  3,569  in FB Financial Corp on October 5, 2024 and sell it today you would earn a total of  1,485  from holding FB Financial Corp or generate 41.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Pacific Premier Bancorp  vs.  FB Financial Corp

Pacific Premier Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Premier Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Pacific Premier is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

FB Financial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FB Financial Corp are ranked lower than 6 (%) 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 Pacific Premier and FB Financial

The main advantage of trading using opposite Pacific Premier and FB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Premier 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 Pacific Premier Bancorp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.