Correlation Between Flushing Financial and Independent Bank

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

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

Diversification Opportunities for Flushing Financial and Independent Bank

0.94

Correlation Coefficient

Flushing Financial  Independent Bank

Almost no diversification

The 3 months correlation between Flushing and Independent is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Flushing Financial and Independent Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independent Bank and Flushing 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 Flushing Financial are associated (or correlated) with Independent Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independent Bank has no effect on the direction of Flushing Financial i.e., Flushing Financial and Independent Bank go up and down completely randomly.

Pair Corralation between Flushing Financial and Independent Bank

Given the investment horizon of 90 days Flushing Financial is expected to generate 1.17 times more return on investment than Independent Bank. However, Flushing Financial is 1.17 times more volatile than Independent Bank. It trades about 0.14 of its potential returns per unit of risk. Independent Bank is currently generating about 0.1 per unit of risk. If you would invest  1,336  in Flushing Financial on September 12, 2024 and sell it today you would earn a total of  375.00  from holding Flushing Financial or generate 28.07% return on investment over 90 days.

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

Flushing Financial  vs.  Independent Bank

Flushing Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Flushing Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Flushing Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Independent Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Independent Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, Independent Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flushing Financial and Independent Bank

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

The idea behind Flushing Financial and Independent Bank 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.