Correlation Between FB Financial and Five Star
Can any of the company-specific risk be diversified away by investing in both FB Financial and Five Star 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 FB Financial and Five Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FB Financial Corp and Five Star Bancorp, you can compare the effects of market volatilities on FB Financial and Five Star 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 FB Financial with a short position of Five Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of FB Financial and Five Star.
Diversification Opportunities for FB Financial and Five Star
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FBK and Five is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding FB Financial Corp and Five Star Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Star Bancorp and FB Financial 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 FB Financial Corp are associated (or correlated) with Five Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Star Bancorp has no effect on the direction of FB Financial i.e., FB Financial and Five Star go up and down completely randomly.
Pair Corralation between FB Financial and Five Star
Considering the 90-day investment horizon FB Financial Corp is expected to generate 1.2 times more return on investment than Five Star. However, FB Financial is 1.2 times more volatile than Five Star Bancorp. It trades about 0.03 of its potential returns per unit of risk. Five Star Bancorp is currently generating about -0.15 per unit of risk. If you would invest 3,433 in FB Financial Corp on January 17, 2024 and sell it today you would earn a total of 30.00 from holding FB Financial Corp or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FB Financial Corp vs. Five Star Bancorp
Performance |
| Timeline |
| FB Financial Corp |
| Five Star Bancorp |
FB Financial and Five Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FB Financial and Five Star
The main advantage of trading using opposite FB Financial and Five Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FB Financial position performs unexpectedly, Five Star 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 Five Star will offset losses from the drop in Five Star's long position.The idea behind FB Financial Corp and Five Star Bancorp 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.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |