Correlation Between American Business and Century Next
Can any of the company-specific risk be diversified away by investing in both American Business and Century Next 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 Century Next 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 Century Next Financial, you can compare the effects of market volatilities on American Business and Century Next 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 Century Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Business and Century Next.
Diversification Opportunities for American Business and Century Next
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Century is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding American Business Bk and Century Next Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Next Financial 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 Century Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Next Financial has no effect on the direction of American Business i.e., American Business and Century Next go up and down completely randomly.
Pair Corralation between American Business and Century Next
Given the investment horizon of 90 days American Business Bk is expected to generate 1.22 times more return on investment than Century Next. However, American Business is 1.22 times more volatile than Century Next Financial. It trades about 0.23 of its potential returns per unit of risk. Century Next Financial is currently generating about 0.11 per unit of risk. If you would invest 3,200 in American Business Bk on August 31, 2024 and sell it today you would earn a total of 1,275 from holding American Business Bk or generate 39.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
American Business Bk vs. Century Next Financial
Performance |
| Timeline |
| American Business |
| Century Next Financial |
American Business and Century Next Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Business and Century Next
The main advantage of trading using opposite American Business and Century Next positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Business position performs unexpectedly, Century Next 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 Century Next will offset losses from the drop in Century Next'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 |
| Century Next vs. Citizens Financial Corp | Century Next vs. Triad Business Bank | Century Next vs. First Ottawa Bancshares | Century Next vs. CCSB Financial Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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