Correlation Between Bridgewater Bancshares and FB Financial
Can any of the company-specific risk be diversified away by investing in both Bridgewater Bancshares 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 Bridgewater Bancshares and FB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgewater Bancshares and FB Financial Corp, you can compare the effects of market volatilities on Bridgewater Bancshares 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 Bridgewater Bancshares with a short position of FB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgewater Bancshares and FB Financial.
Diversification Opportunities for Bridgewater Bancshares and FB Financial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bridgewater and FBK is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bridgewater Bancshares 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 Bridgewater 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 Bridgewater Bancshares 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 Bridgewater Bancshares i.e., Bridgewater Bancshares and FB Financial go up and down completely randomly.
Pair Corralation between Bridgewater Bancshares and FB Financial
Considering the 90-day investment horizon Bridgewater Bancshares is expected to generate 1.34 times less return on investment than FB Financial. In addition to that, Bridgewater Bancshares is 1.05 times more volatile than FB Financial Corp. It trades about 0.03 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 2,909 in FB Financial Corp on January 19, 2024 and sell it today you would earn a total of 647.00 from holding FB Financial Corp or generate 22.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridgewater Bancshares vs. FB Financial Corp
Performance |
| Timeline |
| Bridgewater Bancshares |
| FB Financial Corp |
Bridgewater Bancshares and FB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgewater Bancshares and FB Financial
The main advantage of trading using opposite Bridgewater Bancshares and FB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgewater Bancshares 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.| Bridgewater Bancshares vs. HMN Financial | Bridgewater Bancshares vs. Home Federal Bancorp | Bridgewater Bancshares vs. First Financial Northwest | Bridgewater Bancshares vs. First Northwest Bancorp |
| FB Financial vs. Home Bancorp | FB Financial vs. First Business Financial | FB Financial vs. LINKBANCORP | FB Financial vs. Great Southern Bancorp |
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 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.
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