Correlation Between LINKBANCORP and FB Financial

Can any of the company-specific risk be diversified away by investing in both LINKBANCORP and FB Financial 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 LINKBANCORP and FB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LINKBANCORP and FB Financial Corp, you can compare the effects of market volatilities on LINKBANCORP and FB Financial 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 LINKBANCORP with a short position of FB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LINKBANCORP and FB Financial.

Diversification Opportunities for LINKBANCORP and FB Financial

0.34

Correlation Coefficient

LINKBANCORP  FB Financial

Weak diversification

The 3 months correlation between LINKBANCORP and FBK is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding LINKBANCORP and FB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FB Financial Corp and LINKBANCORP 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 LINKBANCORP are associated (or correlated) with FB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FB Financial Corp has no effect on the direction of LINKBANCORP i.e., LINKBANCORP and FB Financial go up and down completely randomly.

Pair Corralation between LINKBANCORP and FB Financial

Given the investment horizon of 90 days LINKBANCORP is expected to under-perform the FB Financial. In addition to that, LINKBANCORP is 1.12 times more volatile than FB Financial Corp. It trades about -0.03 of its total potential returns per unit of risk. FB Financial Corp is currently generating about 0.07 per unit of volatility. If you would invest  3,491  in FB Financial Corp on February 1, 2024 and sell it today you would earn a total of  174.00  from holding FB Financial Corp or generate 4.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

LINKBANCORP  vs.  FB Financial Corp

LINKBANCORP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LINKBANCORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, LINKBANCORP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

FB Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FB Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, FB Financial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with LINKBANCORP and FB Financial

The main advantage of trading using opposite LINKBANCORP and FB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LINKBANCORP position performs unexpectedly, FB Financial 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 FB Financial will offset losses from the drop in FB Financial's long position.

The idea behind LINKBANCORP and FB Financial Corp 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..