Correlation Between Apollo Bancorp and Potomac Bancshares
Can any of the company-specific risk be diversified away by investing in both Apollo Bancorp and Potomac 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 Apollo Bancorp and Potomac Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apollo Bancorp and Potomac Bancshares, you can compare the effects of market volatilities on Apollo Bancorp and Potomac 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 Apollo Bancorp with a short position of Potomac Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Bancorp and Potomac Bancshares.
Diversification Opportunities for Apollo Bancorp and Potomac Bancshares
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apollo and Potomac is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Bancorp and Potomac Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Potomac Bancshares and Apollo 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 Apollo Bancorp are associated (or correlated) with Potomac Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Potomac Bancshares has no effect on the direction of Apollo Bancorp i.e., Apollo Bancorp and Potomac Bancshares go up and down completely randomly.
Pair Corralation between Apollo Bancorp and Potomac Bancshares
Given the investment horizon of 90 days Apollo Bancorp is expected to generate 1.36 times more return on investment than Potomac Bancshares. However, Apollo Bancorp is 1.36 times more volatile than Potomac Bancshares. It trades about 0.02 of its potential returns per unit of risk. Potomac Bancshares is currently generating about 0.0 per unit of risk. If you would invest 3,702 in Apollo Bancorp on August 26, 2024 and sell it today you would lose (52.00) from holding Apollo Bancorp or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.75% |
| Values | Daily Returns |
Apollo Bancorp vs. Potomac Bancshares
Performance |
| Timeline |
| Apollo Bancorp |
| Potomac Bancshares |
Apollo Bancorp and Potomac Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Bancorp and Potomac Bancshares
The main advantage of trading using opposite Apollo Bancorp and Potomac Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Bancorp position performs unexpectedly, Potomac 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 Potomac Bancshares will offset losses from the drop in Potomac Bancshares' long position.| Apollo Bancorp vs. The Farmers Bank | Apollo Bancorp vs. Bank of Utica | Apollo Bancorp vs. Delhi Bank Corp | Apollo Bancorp vs. CCSB Financial Corp |
| Potomac Bancshares vs. Invesco High Income | Potomac Bancshares vs. Blackrock Muniholdings Ny | Potomac Bancshares vs. MFS Investment Grade | Potomac Bancshares vs. Federated Premier Municipal |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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