Correlation Between FS Bancorp and First Savings

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

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

Diversification Opportunities for FS Bancorp and First Savings

-0.22

Correlation Coefficient

FS Bancorp  First Savings

Very good diversification

The 3 months correlation between FSBW and First is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding FS Bancorp and First Savings Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Savings Financial and FS 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 FS Bancorp are associated (or correlated) with First Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Savings Financial has no effect on the direction of FS Bancorp i.e., FS Bancorp and First Savings go up and down completely randomly.

Pair Corralation between FS Bancorp and First Savings

Given the investment horizon of 90 days FS Bancorp is expected to under-perform the First Savings. But the stock apears to be less risky and, when comparing its historical volatility, FS Bancorp is 1.61 times less risky than First Savings. The stock trades about -0.08 of its potential returns per unit of risk. The First Savings Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,600  in First Savings Financial on July 21, 2025 and sell it today you would earn a total of  365.00  from holding First Savings Financial or generate 14.04% return on investment over 90 days.

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

FS Bancorp  vs.  First Savings Financial

FS Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days FS Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

First Savings Financial

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in First Savings Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, First Savings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FS Bancorp and First Savings

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

The idea behind FS Bancorp and First Savings Financial 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.