Correlation Between FFB Bancorp and US Metro

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

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

Diversification Opportunities for FFB Bancorp and US Metro

-0.28

Correlation Coefficient

FFB Bancorp  US Metro

Very good diversification

The 3 months correlation between FFB and USMT is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding FFB Bancorp and US Metro Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Metro Bancorp and FFB Bancorp 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 FFB Bancorp are associated (or correlated) with US Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Metro Bancorp has no effect on the direction of FFB Bancorp i.e., FFB Bancorp and US Metro go up and down completely randomly.

Pair Corralation between FFB Bancorp and US Metro

Given the investment horizon of 90 days FFB Bancorp is expected to generate 0.6 times more return on investment than US Metro. However, FFB Bancorp is 1.67 times less risky than US Metro. It trades about 0.1 of its potential returns per unit of risk. US Metro Bancorp is currently generating about 0.0 per unit of risk. If you would invest  7,810  in FFB Bancorp on July 2, 2025 and sell it today you would earn a total of  321.00  from holding FFB Bancorp or generate 4.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

FFB Bancorp  vs.  US Metro Bancorp

FFB Bancorp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in FFB Bancorp are ranked lower than 7 (%) 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 recent stock price disturbance, may contribute to short-term losses for the investors.

US Metro Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days US Metro Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, US Metro is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FFB Bancorp and US Metro

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

The idea behind FFB Bancorp and US Metro 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.