Correlation Between American Business and BEO Bancorp
Can any of the company-specific risk be diversified away by investing in both American Business and BEO 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 American Business and BEO Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Business Bk and BEO Bancorp, you can compare the effects of market volatilities on American Business and BEO 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 American Business with a short position of BEO Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Business and BEO Bancorp.
Diversification Opportunities for American Business and BEO Bancorp
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and BEO is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding American Business Bk and BEO Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEO Bancorp and American Business 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 American Business Bk are associated (or correlated) with BEO Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEO Bancorp has no effect on the direction of American Business i.e., American Business and BEO Bancorp go up and down completely randomly.
Pair Corralation between American Business and BEO Bancorp
Given the investment horizon of 90 days American Business Bk is expected to generate 1.27 times more return on investment than BEO Bancorp. However, American Business is 1.27 times more volatile than BEO Bancorp. It trades about 0.32 of its potential returns per unit of risk. BEO Bancorp is currently generating about -0.04 per unit of risk. If you would invest 3,640 in American Business Bk on August 29, 2024 and sell it today you would earn a total of 810.00 from holding American Business Bk or generate 22.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
American Business Bk vs. BEO Bancorp
Performance |
| Timeline |
| American Business |
| BEO Bancorp |
American Business and BEO Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Business and BEO Bancorp
The main advantage of trading using opposite American Business and BEO Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Business position performs unexpectedly, BEO 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 BEO Bancorp will offset losses from the drop in BEO Bancorp's long position.| American Business vs. Private Bancorp of | American Business vs. Avidbank Holdings | American Business vs. Century Next Financial | American Business vs. American Riviera Bank |
| BEO Bancorp vs. CCSB Financial Corp | BEO Bancorp vs. Delhi Bank Corp | BEO Bancorp vs. First Community Financial | BEO Bancorp vs. First Community |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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