Correlation Between Cardano and Banner
Can any of the company-specific risk be diversified away by investing in both Cardano and Banner 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 Cardano and Banner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardano and Banner, you can compare the effects of market volatilities on Cardano and Banner 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 Cardano with a short position of Banner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and Banner.
Diversification Opportunities for Cardano and Banner
Poor diversification
The 3 months correlation between Cardano and Banner is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Banner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banner and Cardano 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 Cardano are associated (or correlated) with Banner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banner has no effect on the direction of Cardano i.e., Cardano and Banner go up and down completely randomly.
Pair Corralation between Cardano and Banner
Assuming the 90 days trading horizon Cardano is expected to generate 3.87 times more return on investment than Banner. However, Cardano is 3.87 times more volatile than Banner. It trades about 0.15 of its potential returns per unit of risk. Banner is currently generating about -0.03 per unit of risk. If you would invest 80.00 in Cardano on October 20, 2024 and sell it today you would earn a total of 34.00 from holding Cardano or generate 42.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.18% |
| Values | Daily Returns |
Cardano vs. Banner
Performance |
| Timeline |
| Cardano |
| Banner |
Cardano and Banner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardano and Banner
The main advantage of trading using opposite Cardano and Banner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano position performs unexpectedly, Banner 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 Banner will offset losses from the drop in Banner's long position.The idea behind Cardano and Banner 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.| Banner vs. BancFirst | Banner vs. City Holding | Banner vs. Columbia Banking System | Banner vs. CVB Financial |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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