Correlation Between Five Star and Ffbw

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Can any of the company-specific risk be diversified away by investing in both Five Star 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 Five Star and Ffbw into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Five Star Bancorp and Ffbw Inc, you can compare the effects of market volatilities on Five Star 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 Five Star with a short position of Ffbw. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five Star and Ffbw.

Diversification Opportunities for Five Star and Ffbw

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between Five and Ffbw is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Five Star Bancorp and Ffbw Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ffbw Inc and Five Star 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 Five Star Bancorp 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 Five Star i.e., Five Star and Ffbw go up and down completely randomly.

Pair Corralation between Five Star and Ffbw

Given the investment horizon of 90 days Five Star Bancorp is expected to under-perform the Ffbw. In addition to that, Five Star is 2.12 times more volatile than Ffbw Inc. It trades about 0.0 of its total potential returns per unit of risk. Ffbw Inc is currently generating about 0.0 per unit of volatility. If you would invest  1,205  in Ffbw Inc on December 30, 2023 and sell it today you would lose (27.00) from holding Ffbw Inc or give up 2.24% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy43.12%
ValuesDaily Returns

Five Star Bancorp  vs.  Ffbw Inc

 Performance 
       Timeline  
Five Star Bancorp 

Risk-Adjusted Performance

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Over the last 90 days Five Star Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Ffbw Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Five Star and Ffbw Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Five Star and Ffbw

The main advantage of trading using opposite Five Star and Ffbw positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five Star 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 Five Star Bancorp 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.
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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