Correlation Between FS Bancorp and First United

Can any of the company-specific risk be diversified away by investing in both FS Bancorp and First United 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 United 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 United, you can compare the effects of market volatilities on FS Bancorp and First United 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 United. Check out your portfolio center. Please also check ongoing floating volatility patterns of FS Bancorp and First United.

Diversification Opportunities for FS Bancorp and First United

0.91

Correlation Coefficient

FS Bancorp  First United

Almost no diversification

The 3 months correlation between FSBW and First is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding FS Bancorp and First United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First United 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 United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First United has no effect on the direction of FS Bancorp i.e., FS Bancorp and First United go up and down completely randomly.

Pair Corralation between FS Bancorp and First United

Given the investment horizon of 90 days FS Bancorp is expected to generate 2.93 times less return on investment than First United. But when comparing it to its historical volatility, FS Bancorp is 1.18 times less risky than First United. It trades about 0.07 of its potential returns per unit of risk. First United is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,012  in First United on April 24, 2025 and sell it today you would earn a total of  564.00  from holding First United or generate 18.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

FS Bancorp  vs.  First United

FS Bancorp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FS Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, FS Bancorp may actually be approaching a critical reversion point that can send shares even higher in August 2025.

First United

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First United are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, First United exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FS Bancorp and First United

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

The idea behind FS Bancorp and First United 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.