Correlation Between Bogota Financial and FNCB Bancorp

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

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

Diversification Opportunities for Bogota Financial and FNCB Bancorp

-0.22

Correlation Coefficient

Bogota Financial  FNCB Bancorp

Very good diversification

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

Pair Corralation between Bogota Financial and FNCB Bancorp

If you would invest  675.00  in FNCB Bancorp on September 13, 2024 and sell it today you would earn a total of  0.00  from holding FNCB Bancorp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Bogota Financial Corp  vs.  FNCB Bancorp

Bogota Financial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bogota Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, Bogota Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FNCB Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bogota Financial and FNCB Bancorp

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

The idea behind Bogota Financial Corp and FNCB 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.