Correlation Between Finward Bancorp and HV Bancorp

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Can any of the company-specific risk be diversified away by investing in both Finward Bancorp and HV 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 Finward Bancorp and HV Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finward Bancorp and HV Bancorp, you can compare the effects of market volatilities on Finward Bancorp and HV 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 Finward Bancorp with a short position of HV Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finward Bancorp and HV Bancorp.

Diversification Opportunities for Finward Bancorp and HV Bancorp

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Finward and HVBC is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and HV Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HV Bancorp and Finward 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 Finward Bancorp are associated (or correlated) with HV Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HV Bancorp has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and HV Bancorp go up and down completely randomly.

Pair Corralation between Finward Bancorp and HV Bancorp

Given the investment horizon of 90 days Finward Bancorp is expected to generate 3.64 times less return on investment than HV Bancorp. In addition to that, Finward Bancorp is 1.13 times more volatile than HV Bancorp. It trades about 0.02 of its total potential returns per unit of risk. HV Bancorp is currently generating about 0.09 per unit of volatility. If you would invest  3,262  in HV Bancorp on September 11, 2024 and sell it today you would earn a total of  198.00  from holding HV Bancorp or generate 6.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy10.17%
ValuesDaily Returns

Finward Bancorp  vs.  HV Bancorp

 Performance 
       Timeline  
Finward Bancorp 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Finward Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Finward Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.
HV Bancorp 

Risk-Adjusted Performance

0 of 100

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

Finward Bancorp and HV Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Finward Bancorp and HV Bancorp

The main advantage of trading using opposite Finward Bancorp and HV Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finward Bancorp position performs unexpectedly, HV 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 HV Bancorp will offset losses from the drop in HV Bancorp's long position.
The idea behind Finward Bancorp and HV 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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