Correlation Between Andover Bancorp and Baraboo Bancorporation
Can any of the company-specific risk be diversified away by investing in both Andover Bancorp and Baraboo Bancorporation 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 Baraboo Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Andover Bancorp and Baraboo Bancorporation, you can compare the effects of market volatilities on Andover Bancorp and Baraboo Bancorporation 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 Baraboo Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andover Bancorp and Baraboo Bancorporation.
Diversification Opportunities for Andover Bancorp and Baraboo Bancorporation
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Andover and Baraboo is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Andover Bancorp and Baraboo Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baraboo Bancorporation 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 Baraboo Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baraboo Bancorporation has no effect on the direction of Andover Bancorp i.e., Andover Bancorp and Baraboo Bancorporation go up and down completely randomly.
Pair Corralation between Andover Bancorp and Baraboo Bancorporation
Given the investment horizon of 90 days Andover Bancorp is expected to under-perform the Baraboo Bancorporation. In addition to that, Andover Bancorp is 2.7 times more volatile than Baraboo Bancorporation. It trades about -0.2 of its total potential returns per unit of risk. Baraboo Bancorporation is currently generating about 0.22 per unit of volatility. If you would invest 309.00 in Baraboo Bancorporation on August 29, 2024 and sell it today you would earn a total of 21.00 from holding Baraboo Bancorporation or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Andover Bancorp vs. Baraboo Bancorp.
Performance |
| Timeline |
| Andover Bancorp |
| Baraboo Bancorporation |
Andover Bancorp and Baraboo Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Andover Bancorp and Baraboo Bancorporation
The main advantage of trading using opposite Andover Bancorp and Baraboo Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andover Bancorp position performs unexpectedly, Baraboo Bancorporation 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 Baraboo Bancorporation will offset losses from the drop in Baraboo Bancorporation's long position.The idea behind Andover Bancorp and Baraboo Bancorporation 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.| Baraboo Bancorporation vs. Andover Bancorp | Baraboo Bancorporation vs. Aozora Bank Ltd | Baraboo Bancorporation vs. Israel Discount Bank | Baraboo Bancorporation vs. Schweizerische Nationalbank |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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