Correlation Between FVCBankcorp and Metropolitan Bank
Can any of the company-specific risk be diversified away by investing in both FVCBankcorp and Metropolitan Bank 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 Metropolitan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FVCBankcorp and Metropolitan Bank Holding, you can compare the effects of market volatilities on FVCBankcorp and Metropolitan Bank 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 Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of FVCBankcorp and Metropolitan Bank.
Diversification Opportunities for FVCBankcorp and Metropolitan Bank
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FVCBankcorp and Metropolitan is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding FVCBankcorp and Metropolitan Bank Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank Holding 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 Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank Holding has no effect on the direction of FVCBankcorp i.e., FVCBankcorp and Metropolitan Bank go up and down completely randomly.
Pair Corralation between FVCBankcorp and Metropolitan Bank
Given the investment horizon of 90 days FVCBankcorp is expected to under-perform the Metropolitan Bank. But the stock apears to be less risky and, when comparing its historical volatility, FVCBankcorp is 1.45 times less risky than Metropolitan Bank. The stock trades about -0.08 of its potential returns per unit of risk. The Metropolitan Bank Holding is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,620 in Metropolitan Bank Holding on January 26, 2024 and sell it today you would earn a total of 605.00 from holding Metropolitan Bank Holding or generate 16.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FVCBankcorp vs. Metropolitan Bank Holding
Performance |
| Timeline |
| FVCBankcorp |
| Metropolitan Bank Holding |
FVCBankcorp and Metropolitan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FVCBankcorp and Metropolitan Bank
The main advantage of trading using opposite FVCBankcorp and Metropolitan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FVCBankcorp position performs unexpectedly, Metropolitan Bank 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 Metropolitan Bank will offset losses from the drop in Metropolitan Bank's long position.| FVCBankcorp vs. HMN Financial | FVCBankcorp vs. Home Federal Bancorp | FVCBankcorp vs. First Financial Northwest | FVCBankcorp vs. First Northwest Bancorp |
| Metropolitan Bank vs. Customers Bancorp | Metropolitan Bank vs. BayCom Corp | Metropolitan Bank vs. Capital Bancorp | Metropolitan Bank vs. Investar Holding Corp |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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