Correlation Between Bank of San Francisco and FFB Bancorp

Can any of the company-specific risk be diversified away by investing in both Bank of San Francisco and FFB Bancorp 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 Bank of San Francisco and FFB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of San and FFB Bancorp, you can compare the effects of market volatilities on Bank of San Francisco and FFB Bancorp 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 Bank of San Francisco with a short position of FFB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of San Francisco and FFB Bancorp.

Diversification Opportunities for Bank of San Francisco and FFB Bancorp

-0.48

Correlation Coefficient

Bank of San Francisco  FFB Bancorp

Very good diversification

The 3 months correlation between Bank and FFB is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bank of San and FFB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FFB Bancorp and Bank of San Francisco 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 Bank of San are associated (or correlated) with FFB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FFB Bancorp has no effect on the direction of Bank of San Francisco i.e., Bank of San Francisco and FFB Bancorp go up and down completely randomly.

Pair Corralation between Bank of San Francisco and FFB Bancorp

Given the investment horizon of 90 days Bank of San is expected to generate 0.9 times more return on investment than FFB Bancorp. However, Bank of San is 1.12 times less risky than FFB Bancorp. It trades about 0.05 of its potential returns per unit of risk. FFB Bancorp is currently generating about 0.03 per unit of risk. If you would invest  2,025  in Bank of San on May 4, 2025 and sell it today you would earn a total of  724.00  from holding Bank of San or generate 35.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.98%
Values	Daily Returns

Bank of San  vs.  FFB Bancorp

Bank of San Francisco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of San has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

FFB Bancorp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FFB Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, FFB Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank of San Francisco and FFB Bancorp

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

The idea behind Bank of San and FFB Bancorp 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.