Correlation Between Signature Bank and Ffbw

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

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

Diversification Opportunities for Signature Bank and Ffbw

-0.47

Correlation Coefficient

Signature Bank  Ffbw

Very good diversification

The 3 months correlation between Signature and Ffbw is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Signature Bank and Ffbw Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ffbw Inc and Signature Bank 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 Signature Bank 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 Signature Bank i.e., Signature Bank and Ffbw go up and down completely randomly.

Pair Corralation between Signature Bank and Ffbw

Assuming the 90 days horizon Signature Bank is expected to generate 30.92 times more return on investment than Ffbw. However, Signature Bank is 30.92 times more volatile than Ffbw Inc. It trades about 0.1 of its potential returns per unit of risk. Ffbw Inc is currently generating about -0.16 per unit of risk. If you would invest  1,744  in Signature Bank on October 3, 2024 and sell it today you would lose (1,742) from holding Signature Bank or give up 99.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	17.56%
Values	Daily Returns

Signature Bank  vs.  Ffbw Inc

Signature Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Signature Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Signature Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional 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 Signature Bank and Ffbw

The main advantage of trading using opposite Signature Bank and Ffbw positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Signature Bank 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 Signature Bank 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.