Correlation Between ST Bancorp and Finward Bancorp

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

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

Diversification Opportunities for ST Bancorp and Finward Bancorp

-0.28

Correlation Coefficient

ST Bancorp  Finward Bancorp

Very good diversification

The 3 months correlation between STBA and Finward is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding ST Bancorp and Finward Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finward Bancorp and ST 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 ST Bancorp are associated (or correlated) with Finward Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finward Bancorp has no effect on the direction of ST Bancorp i.e., ST Bancorp and Finward Bancorp go up and down completely randomly.

Pair Corralation between ST Bancorp and Finward Bancorp

Given the investment horizon of 90 days ST Bancorp is expected to generate 1.05 times more return on investment than Finward Bancorp. However, ST Bancorp is 1.05 times more volatile than Finward Bancorp. It trades about -0.02 of its potential returns per unit of risk. Finward Bancorp is currently generating about -0.11 per unit of risk. If you would invest  3,727  in ST Bancorp on May 9, 2025 and sell it today you would lose (98.00) from holding ST Bancorp or give up 2.63% of portfolio value over 90 days.

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

ST Bancorp  vs.  Finward Bancorp

ST Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days ST Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, ST Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Finward Bancorp

Risk-Adjusted Performance

Weakest

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.

Pair Trading with ST Bancorp and Finward Bancorp

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

The idea behind ST Bancorp and Finward Bancorp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.