Correlation Between American National and Affinity Bancshares
Can any of the company-specific risk be diversified away by investing in both American National and Affinity Bancshares 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 National and Affinity Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American National Bankshares and Affinity Bancshares, you can compare the effects of market volatilities on American National and Affinity Bancshares 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 National with a short position of Affinity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of American National and Affinity Bancshares.
Diversification Opportunities for American National and Affinity Bancshares
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Affinity is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding American National Bankshares and Affinity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Bancshares and American National 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 National Bankshares are associated (or correlated) with Affinity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity Bancshares has no effect on the direction of American National i.e., American National and Affinity Bancshares go up and down completely randomly.
Pair Corralation between American National and Affinity Bancshares
Given the investment horizon of 90 days American National Bankshares is expected to under-perform the Affinity Bancshares. In addition to that, American National is 1.02 times more volatile than Affinity Bancshares. It trades about -0.04 of its total potential returns per unit of risk. Affinity Bancshares is currently generating about 0.05 per unit of volatility. If you would invest 1,436 in Affinity Bancshares on August 30, 2024 and sell it today you would earn a total of 714.00 from holding Affinity Bancshares or generate 49.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.5% |
| Values | Daily Returns |
American National Bankshares vs. Affinity Bancshares
Performance |
| Timeline |
| American National |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Affinity Bancshares |
American National and Affinity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American National and Affinity Bancshares
The main advantage of trading using opposite American National and Affinity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American National position performs unexpectedly, Affinity Bancshares 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 Affinity Bancshares will offset losses from the drop in Affinity Bancshares' long position.| American National vs. First Northwest Bancorp | American National vs. Community West Bancshares | American National vs. First Financial Northwest | American National vs. Great Southern Bancorp |
| Affinity Bancshares vs. SVB T Corp | Affinity Bancshares vs. First Capital | Affinity Bancshares vs. Pioneer Bankcorp | Affinity Bancshares vs. Liberty Northwest 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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