Correlation Between Ames National and First Of
Can any of the company-specific risk be diversified away by investing in both Ames National and First Of 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 Ames National and First Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ames National and First of Long, you can compare the effects of market volatilities on Ames National and First Of 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 Ames National with a short position of First Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ames National and First Of.
Diversification Opportunities for Ames National and First Of
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ames and First is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ames National and First of Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First of Long and Ames 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 Ames National are associated (or correlated) with First Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First of Long has no effect on the direction of Ames National i.e., Ames National and First Of go up and down completely randomly.
Pair Corralation between Ames National and First Of
Given the investment horizon of 90 days Ames National is expected to generate 1.95 times less return on investment than First Of. But when comparing it to its historical volatility, Ames National is 2.08 times less risky than First Of. It trades about 0.15 of its potential returns per unit of risk. First of Long is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,228 in First of Long on November 28, 2024 and sell it today you would earn a total of 68.00 from holding First of Long or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ames National vs. First of Long
Performance |
| Timeline |
| Ames National |
| First of Long |
Ames National and First Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ames National and First Of
The main advantage of trading using opposite Ames National and First Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ames National position performs unexpectedly, First Of 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 First Of will offset losses from the drop in First Of's long position.| Ames National vs. First Community | Ames National vs. Old Point Financial | Ames National vs. Oak Valley Bancorp | Ames National vs. Chemung Financial Corp |
| First Of vs. Great Southern Bancorp | First Of vs. Enterprise Bancorp | First Of vs. Home Bancorp | First Of vs. Community West Bancshares |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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