Correlation Between Alpine Banks and OptimumBank Holdings
Can any of the company-specific risk be diversified away by investing in both Alpine Banks and OptimumBank Holdings 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 Alpine Banks and OptimumBank Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alpine Banks of and OptimumBank Holdings, you can compare the effects of market volatilities on Alpine Banks and OptimumBank Holdings 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 Alpine Banks with a short position of OptimumBank Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpine Banks and OptimumBank Holdings.
Diversification Opportunities for Alpine Banks and OptimumBank Holdings
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alpine and OptimumBank is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Alpine Banks of and OptimumBank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptimumBank Holdings and Alpine Banks 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 Alpine Banks of are associated (or correlated) with OptimumBank Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptimumBank Holdings has no effect on the direction of Alpine Banks i.e., Alpine Banks and OptimumBank Holdings go up and down completely randomly.
Pair Corralation between Alpine Banks and OptimumBank Holdings
Assuming the 90 days horizon Alpine Banks is expected to generate 1.53 times less return on investment than OptimumBank Holdings. But when comparing it to its historical volatility, Alpine Banks of is 2.33 times less risky than OptimumBank Holdings. It trades about 0.12 of its potential returns per unit of risk. OptimumBank Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 329.00 in OptimumBank Holdings on September 14, 2024 and sell it today you would earn a total of 161.00 from holding OptimumBank Holdings or generate 48.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Alpine Banks of vs. OptimumBank Holdings
Performance |
| Timeline |
| Alpine Banks |
| OptimumBank Holdings |
Alpine Banks and OptimumBank Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alpine Banks and OptimumBank Holdings
The main advantage of trading using opposite Alpine Banks and OptimumBank Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpine Banks position performs unexpectedly, OptimumBank Holdings 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 OptimumBank Holdings will offset losses from the drop in OptimumBank Holdings' long position.The idea behind Alpine Banks of and OptimumBank Holdings 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.| OptimumBank Holdings vs. First National Bank | OptimumBank Holdings vs. TrustCo Bank Corp | OptimumBank Holdings vs. Inter Co Class | OptimumBank Holdings vs. Rhinebeck Bancorp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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