Correlation Between Plumas Bancorp and Flexsteel Industries

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

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

Diversification Opportunities for Plumas Bancorp and Flexsteel Industries

0.3

Correlation Coefficient

Plumas Bancorp  Flexsteel Industries

Weak diversification

The 3 months correlation between Plumas and Flexsteel is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Plumas Bancorp and Flexsteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexsteel Industries and Plumas 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 Plumas Bancorp are associated (or correlated) with Flexsteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexsteel Industries has no effect on the direction of Plumas Bancorp i.e., Plumas Bancorp and Flexsteel Industries go up and down completely randomly.

Pair Corralation between Plumas Bancorp and Flexsteel Industries

Given the investment horizon of 90 days Plumas Bancorp is expected to under-perform the Flexsteel Industries. But the stock apears to be less risky and, when comparing its historical volatility, Plumas Bancorp is 1.83 times less risky than Flexsteel Industries. The stock trades about -0.04 of its potential returns per unit of risk. The Flexsteel Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,091  in Flexsteel Industries on May 7, 2025 and sell it today you would earn a total of  315.00  from holding Flexsteel Industries or generate 10.19% return on investment over 90 days.

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

Plumas Bancorp  vs.  Flexsteel Industries

Plumas Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plumas Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Plumas Bancorp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Flexsteel Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flexsteel Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Flexsteel Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Plumas Bancorp and Flexsteel Industries

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

The idea behind Plumas Bancorp and Flexsteel Industries 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 Commodity Directory module to find actively traded commodities issued by global exchanges.