Correlation Between Auburn Bancorp and Andover Bancorp
Can any of the company-specific risk be diversified away by investing in both Auburn Bancorp and Andover 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 Auburn Bancorp and Andover Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auburn Bancorp and Andover Bancorp, you can compare the effects of market volatilities on Auburn Bancorp and Andover 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 Auburn Bancorp with a short position of Andover Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auburn Bancorp and Andover Bancorp.
Diversification Opportunities for Auburn Bancorp and Andover Bancorp
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Auburn and Andover is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Auburn Bancorp and Andover Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andover Bancorp and Auburn 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 Auburn Bancorp are associated (or correlated) with Andover Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andover Bancorp has no effect on the direction of Auburn Bancorp i.e., Auburn Bancorp and Andover Bancorp go up and down completely randomly.
Pair Corralation between Auburn Bancorp and Andover Bancorp
Given the investment horizon of 90 days Auburn Bancorp is expected to generate 3.63 times less return on investment than Andover Bancorp. But when comparing it to its historical volatility, Auburn Bancorp is 1.86 times less risky than Andover Bancorp. It trades about 0.01 of its potential returns per unit of risk. Andover Bancorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,926 in Andover Bancorp on November 2, 2024 and sell it today you would earn a total of 44.00 from holding Andover Bancorp or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 77.82% |
| Values | Daily Returns |
Auburn Bancorp vs. Andover Bancorp
Performance |
| Timeline |
| Auburn Bancorp |
| Andover Bancorp |
Auburn Bancorp and Andover Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auburn Bancorp and Andover Bancorp
The main advantage of trading using opposite Auburn Bancorp and Andover Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auburn Bancorp position performs unexpectedly, Andover 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 Andover Bancorp will offset losses from the drop in Andover Bancorp's long position.| Auburn Bancorp vs. Andover Bancorp | Auburn Bancorp vs. Aozora Bank Ltd | Auburn Bancorp vs. Absa Group Limited |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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