Correlation Between Bankwell Financial and Exchange Bankshares
Can any of the company-specific risk be diversified away by investing in both Bankwell Financial and Exchange Bankshares 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 Bankwell Financial and Exchange Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bankwell Financial Group and Exchange Bankshares, you can compare the effects of market volatilities on Bankwell Financial and Exchange Bankshares 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 Bankwell Financial with a short position of Exchange Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankwell Financial and Exchange Bankshares.
Diversification Opportunities for Bankwell Financial and Exchange Bankshares
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bankwell and Exchange is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bankwell Financial Group and Exchange Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Bankshares and Bankwell 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 Bankwell Financial Group are associated (or correlated) with Exchange Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Bankshares has no effect on the direction of Bankwell Financial i.e., Bankwell Financial and Exchange Bankshares go up and down completely randomly.
Pair Corralation between Bankwell Financial and Exchange Bankshares
Given the investment horizon of 90 days Bankwell Financial is expected to generate 3.7 times less return on investment than Exchange Bankshares. But when comparing it to its historical volatility, Bankwell Financial Group is 1.59 times less risky than Exchange Bankshares. It trades about 0.08 of its potential returns per unit of risk. Exchange Bankshares is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 5,300 in Exchange Bankshares on September 11, 2025 and sell it today you would earn a total of 1,690 from holding Exchange Bankshares or generate 31.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bankwell Financial Group vs. Exchange Bankshares
Performance |
| Timeline |
| Bankwell Financial |
| Exchange Bankshares |
Bankwell Financial and Exchange Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bankwell Financial and Exchange Bankshares
The main advantage of trading using opposite Bankwell Financial and Exchange Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankwell Financial position performs unexpectedly, Exchange Bankshares 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 Exchange Bankshares will offset losses from the drop in Exchange Bankshares' long position.| Bankwell Financial vs. Wells Fargo | Bankwell Financial vs. Bank of America | Bankwell Financial vs. Putnam Focused Large | Bankwell Financial vs. Alcoa Corp |
| Exchange Bankshares vs. American Riviera Bank | Exchange Bankshares vs. Primary Bank | Exchange Bankshares vs. Embassy Bancorp | Exchange Bankshares vs. Pacific Financial Corp |
Check out your portfolio center.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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