Correlation Between Finward Bancorp and Bankwell Financial

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

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

Diversification Opportunities for Finward Bancorp and Bankwell Financial

-0.78

Correlation Coefficient

Finward Bancorp  Bankwell Financial

Pay attention - limited upside

The 3 months correlation between Finward and Bankwell is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Bankwell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankwell Financial and Finward 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 Finward Bancorp are associated (or correlated) with Bankwell Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankwell Financial has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and Bankwell Financial go up and down completely randomly.

Pair Corralation between Finward Bancorp and Bankwell Financial

Given the investment horizon of 90 days Finward Bancorp is expected to under-perform the Bankwell Financial. But the stock apears to be less risky and, when comparing its historical volatility, Finward Bancorp is 1.3 times less risky than Bankwell Financial. The stock trades about -0.11 of its potential returns per unit of risk. The Bankwell Financial Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,325  in Bankwell Financial Group on May 6, 2025 and sell it today you would earn a total of  584.00  from holding Bankwell Financial Group or generate 17.56% return on investment over 90 days.

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

Finward Bancorp  vs.  Bankwell Financial Group

Finward Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Finward Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Bankwell Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bankwell Financial Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Bankwell Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Finward Bancorp and Bankwell Financial

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

The idea behind Finward Bancorp and Bankwell Financial Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.