Correlation Between Lake Shore and First Savings

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

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

Diversification Opportunities for Lake Shore and First Savings

-0.52

Correlation Coefficient

Lake Shore  First Savings

Excellent diversification

The 3 months correlation between Lake and First is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lake Shore 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 Lake Shore 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 Lake Shore 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 Lake Shore i.e., Lake Shore and First Savings go up and down completely randomly.

Pair Corralation between Lake Shore and First Savings

Given the investment horizon of 90 days Lake Shore Bancorp is expected to generate 0.74 times more return on investment than First Savings. However, Lake Shore Bancorp is 1.34 times less risky than First Savings. It trades about 0.17 of its potential returns per unit of risk. First Savings Financial is currently generating about -0.08 per unit of risk. If you would invest  1,109  in Lake Shore Bancorp on May 3, 2025 and sell it today you would earn a total of  111.00  from holding Lake Shore Bancorp or generate 10.01% return on investment over 90 days.

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

Lake Shore Bancorp  vs.  First Savings Financial

Lake Shore Bancorp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lake Shore Bancorp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental drivers, Lake Shore may actually be approaching a critical reversion point that can send shares even higher in September 2025.

First Savings Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Savings Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Lake Shore and First Savings

The main advantage of trading using opposite Lake Shore and First Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Shore 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 Lake Shore 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.