Correlation Between Andover Bancorp and Auburn Bancorp
Can any of the company-specific risk be diversified away by investing in both Andover Bancorp and Auburn 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 Andover Bancorp and Auburn Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Andover Bancorp and Auburn Bancorp, you can compare the effects of market volatilities on Andover Bancorp and Auburn 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 Andover Bancorp with a short position of Auburn Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andover Bancorp and Auburn Bancorp.
Diversification Opportunities for Andover Bancorp and Auburn Bancorp
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Andover and Auburn is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Andover Bancorp and Auburn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auburn Bancorp and Andover Bancorp 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 Andover Bancorp are associated (or correlated) with Auburn Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auburn Bancorp has no effect on the direction of Andover Bancorp i.e., Andover Bancorp and Auburn Bancorp go up and down completely randomly.
Pair Corralation between Andover Bancorp and Auburn Bancorp
Given the investment horizon of 90 days Andover Bancorp is expected to generate 1.56 times more return on investment than Auburn Bancorp. However, Andover Bancorp is 1.56 times more volatile than Auburn Bancorp. It trades about 0.01 of its potential returns per unit of risk. Auburn Bancorp is currently generating about -0.03 per unit of risk. If you would invest 1,963 in Andover Bancorp on September 3, 2024 and sell it today you would earn a total of 37.00 from holding Andover Bancorp or generate 1.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 66.06% |
| Values | Daily Returns |
Andover Bancorp vs. Auburn Bancorp
Performance |
| Timeline |
| Andover Bancorp |
| Auburn Bancorp |
Andover Bancorp and Auburn Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Andover Bancorp and Auburn Bancorp
The main advantage of trading using opposite Andover Bancorp and Auburn Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andover Bancorp position performs unexpectedly, Auburn 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 Auburn Bancorp will offset losses from the drop in Auburn Bancorp's long position.| Andover Bancorp vs. First Hawaiian | Andover Bancorp vs. Central Pacific Financial | Andover Bancorp vs. Territorial Bancorp | Andover Bancorp vs. Comerica |
| Auburn Bancorp vs. Western Asset Global | Auburn Bancorp vs. Invesco Trust For | Auburn Bancorp vs. Logan Ridge Finance | Auburn Bancorp vs. Invesco Advantage MIT |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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