Correlation Between Wex and FVCBankcorp
Can any of the company-specific risk be diversified away by investing in both Wex and FVCBankcorp 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 Wex and FVCBankcorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wex Inc and FVCBankcorp, you can compare the effects of market volatilities on Wex and FVCBankcorp 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 Wex with a short position of FVCBankcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wex and FVCBankcorp.
Diversification Opportunities for Wex and FVCBankcorp
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wex and FVCBankcorp is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Wex Inc and FVCBankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FVCBankcorp and Wex 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 Wex Inc are associated (or correlated) with FVCBankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FVCBankcorp has no effect on the direction of Wex i.e., Wex and FVCBankcorp go up and down completely randomly.
Pair Corralation between Wex and FVCBankcorp
Considering the 90-day investment horizon Wex Inc is expected to generate 0.29 times more return on investment than FVCBankcorp. However, Wex Inc is 3.41 times less risky than FVCBankcorp. It trades about -0.06 of its potential returns per unit of risk. FVCBankcorp is currently generating about -0.13 per unit of risk. If you would invest 23,474 in Wex Inc on January 19, 2024 and sell it today you would lose (326.00) from holding Wex Inc or give up 1.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wex Inc vs. FVCBankcorp
Performance |
| Timeline |
| Wex Inc |
| FVCBankcorp |
Wex and FVCBankcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wex and FVCBankcorp
The main advantage of trading using opposite Wex and FVCBankcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wex position performs unexpectedly, FVCBankcorp 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 FVCBankcorp will offset losses from the drop in FVCBankcorp's long position.| Wex vs. CSG Systems International | Wex vs. Squarespace | Wex vs. VeriSign | Wex vs. Consensus Cloud Solutions |
| FVCBankcorp vs. HMN Financial | FVCBankcorp vs. Home Federal Bancorp | FVCBankcorp vs. First Financial Northwest | FVCBankcorp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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