Correlation Between FVCBankcorp and Bridgewater Bancshares
Can any of the company-specific risk be diversified away by investing in both FVCBankcorp and Bridgewater Bancshares 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 FVCBankcorp and Bridgewater Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FVCBankcorp and Bridgewater Bancshares, you can compare the effects of market volatilities on FVCBankcorp and Bridgewater Bancshares 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 FVCBankcorp with a short position of Bridgewater Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of FVCBankcorp and Bridgewater Bancshares.
Diversification Opportunities for FVCBankcorp and Bridgewater Bancshares
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FVCBankcorp and Bridgewater is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding FVCBankcorp and Bridgewater Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgewater Bancshares and FVCBankcorp 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 FVCBankcorp are associated (or correlated) with Bridgewater Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgewater Bancshares has no effect on the direction of FVCBankcorp i.e., FVCBankcorp and Bridgewater Bancshares go up and down completely randomly.
Pair Corralation between FVCBankcorp and Bridgewater Bancshares
Given the investment horizon of 90 days FVCBankcorp is expected to under-perform the Bridgewater Bancshares. In addition to that, FVCBankcorp is 1.19 times more volatile than Bridgewater Bancshares. It trades about 0.0 of its total potential returns per unit of risk. Bridgewater Bancshares is currently generating about 0.08 per unit of volatility. If you would invest 921.00 in Bridgewater Bancshares on January 19, 2024 and sell it today you would earn a total of 196.00 from holding Bridgewater Bancshares or generate 21.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FVCBankcorp vs. Bridgewater Bancshares
Performance |
| Timeline |
| FVCBankcorp |
| Bridgewater Bancshares |
FVCBankcorp and Bridgewater Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FVCBankcorp and Bridgewater Bancshares
The main advantage of trading using opposite FVCBankcorp and Bridgewater Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FVCBankcorp position performs unexpectedly, Bridgewater Bancshares 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 Bridgewater Bancshares will offset losses from the drop in Bridgewater Bancshares' long position.| FVCBankcorp vs. HMN Financial | FVCBankcorp vs. Home Federal Bancorp | FVCBankcorp vs. First Financial Northwest | FVCBankcorp vs. First Northwest Bancorp |
| Bridgewater Bancshares vs. HMN Financial | Bridgewater Bancshares vs. Home Federal Bancorp | Bridgewater Bancshares vs. First Financial Northwest | Bridgewater Bancshares vs. First Northwest 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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