Correlation Between Preferred Bank and REVO INSURANCE
Can any of the company-specific risk be diversified away by investing in both Preferred Bank and REVO INSURANCE 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 Preferred Bank and REVO INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Preferred Bank and REVO INSURANCE SPA, you can compare the effects of market volatilities on Preferred Bank and REVO INSURANCE 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 Preferred Bank with a short position of REVO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Preferred Bank and REVO INSURANCE.
Diversification Opportunities for Preferred Bank and REVO INSURANCE
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Preferred and REVO is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Preferred Bank and REVO INSURANCE SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVO INSURANCE SPA and Preferred Bank 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 Preferred Bank are associated (or correlated) with REVO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVO INSURANCE SPA has no effect on the direction of Preferred Bank i.e., Preferred Bank and REVO INSURANCE go up and down completely randomly.
Pair Corralation between Preferred Bank and REVO INSURANCE
Assuming the 90 days horizon Preferred Bank is expected to generate 0.32 times more return on investment than REVO INSURANCE. However, Preferred Bank is 3.15 times less risky than REVO INSURANCE. It trades about 0.16 of its potential returns per unit of risk. REVO INSURANCE SPA is currently generating about -0.03 per unit of risk. If you would invest 8,125 in Preferred Bank on October 23, 2024 and sell it today you would earn a total of 275.00 from holding Preferred Bank or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Preferred Bank vs. REVO INSURANCE SPA
Performance |
| Timeline |
| Preferred Bank |
| REVO INSURANCE SPA |
Preferred Bank and REVO INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Preferred Bank and REVO INSURANCE
The main advantage of trading using opposite Preferred Bank and REVO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Preferred Bank position performs unexpectedly, REVO INSURANCE 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 REVO INSURANCE will offset losses from the drop in REVO INSURANCE's long position.| Preferred Bank vs. POSBO UNSPADRS20YC1 | Preferred Bank vs. Postal Savings Bank | Preferred Bank vs. Truist Financial | Preferred Bank vs. OVERSEA CHINUNSPADR2 |
| REVO INSURANCE vs. WIZZ AIR HLDGUNSPADR4 | REVO INSURANCE vs. Westinghouse Air Brake | REVO INSURANCE vs. FORWARD AIR P | REVO INSURANCE vs. Alaska Air Group |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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