Correlation Between Auburn Bancorp and Grand River
Can any of the company-specific risk be diversified away by investing in both Auburn Bancorp and Grand River 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 Grand River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auburn Bancorp and Grand River Commerce, you can compare the effects of market volatilities on Auburn Bancorp and Grand River 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 Grand River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auburn Bancorp and Grand River.
Diversification Opportunities for Auburn Bancorp and Grand River
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Auburn and Grand is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Auburn Bancorp and Grand River Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand River Commerce 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 Grand River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand River Commerce has no effect on the direction of Auburn Bancorp i.e., Auburn Bancorp and Grand River go up and down completely randomly.
Pair Corralation between Auburn Bancorp and Grand River
Given the investment horizon of 90 days Auburn Bancorp is expected to generate 1.08 times less return on investment than Grand River. But when comparing it to its historical volatility, Auburn Bancorp is 8.69 times less risky than Grand River. It trades about 0.32 of its potential returns per unit of risk. Grand River Commerce is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 300.00 in Grand River Commerce on September 1, 2024 and sell it today you would earn a total of 5.00 from holding Grand River Commerce or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auburn Bancorp vs. Grand River Commerce
Performance |
| Timeline |
| Auburn Bancorp |
| Grand River Commerce |
Auburn Bancorp and Grand River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auburn Bancorp and Grand River
The main advantage of trading using opposite Auburn Bancorp and Grand River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auburn Bancorp position performs unexpectedly, Grand River 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 Grand River will offset losses from the drop in Grand River's long position.| Auburn Bancorp vs. Andover Bancorp | Auburn Bancorp vs. Aozora Bank Ltd | Auburn Bancorp vs. Absa Group Limited |
| Grand River vs. FS Bancorp | Grand River vs. Eastern Michigan Financial | Grand River vs. Bank of Botetourt | Grand River vs. FNB Inc |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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