Correlation Between Finward Bancorp and Plumas Bancorp

Can any of the company-specific risk be diversified away by investing in both Finward Bancorp and Plumas 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 Plumas 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 Plumas Bancorp, you can compare the effects of market volatilities on Finward Bancorp and Plumas 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 Plumas Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finward Bancorp and Plumas Bancorp.

Diversification Opportunities for Finward Bancorp and Plumas Bancorp

-0.11

Correlation Coefficient

Finward Bancorp  Plumas Bancorp

Good diversification

The 3 months correlation between Finward and Plumas is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Plumas Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumas 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 Plumas Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumas Bancorp has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and Plumas Bancorp go up and down completely randomly.

Pair Corralation between Finward Bancorp and Plumas Bancorp

Given the investment horizon of 90 days Finward Bancorp is expected to generate 53.72 times less return on investment than Plumas Bancorp. But when comparing it to its historical volatility, Finward Bancorp is 1.09 times less risky than Plumas Bancorp. It trades about 0.0 of its potential returns per unit of risk. Plumas Bancorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,420  in Plumas Bancorp on September 18, 2024 and sell it today you would earn a total of  1,466  from holding Plumas Bancorp or generate 42.87% return on investment over 90 days.

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

Finward Bancorp  vs.  Plumas Bancorp

Finward Bancorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Finward Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Finward Bancorp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Plumas Bancorp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plumas Bancorp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Plumas Bancorp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Finward Bancorp and Plumas Bancorp

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

The idea behind Finward Bancorp and Plumas 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.