Correlation Between Auburn National and Texas Capital
Can any of the company-specific risk be diversified away by investing in both Auburn National and Texas Capital 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 Auburn National and Texas Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auburn National Bancorporation and Texas Capital Bancshares, you can compare the effects of market volatilities on Auburn National and Texas Capital 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 Auburn National with a short position of Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auburn National and Texas Capital.
Diversification Opportunities for Auburn National and Texas Capital
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Auburn and Texas is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Auburn National Bancorp. and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Bancshares and Auburn 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 Auburn National Bancorporation are associated (or correlated) with Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of Auburn National i.e., Auburn National and Texas Capital go up and down completely randomly.
Pair Corralation between Auburn National and Texas Capital
Given the investment horizon of 90 days Auburn National is expected to generate 1.74 times less return on investment than Texas Capital. But when comparing it to its historical volatility, Auburn National Bancorporation is 1.68 times less risky than Texas Capital. It trades about 0.23 of its potential returns per unit of risk. Texas Capital Bancshares is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 7,736 in Texas Capital Bancshares on August 31, 2024 and sell it today you would earn a total of 1,186 from holding Texas Capital Bancshares or generate 15.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auburn National Bancorp. vs. Texas Capital Bancshares
Performance |
| Timeline |
| Auburn National Banc |
| Texas Capital Bancshares |
Auburn National and Texas Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auburn National and Texas Capital
The main advantage of trading using opposite Auburn National and Texas Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auburn National position performs unexpectedly, Texas Capital 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 Texas Capital will offset losses from the drop in Texas Capital's long position.| Auburn National vs. Home Federal Bancorp | Auburn National vs. LINKBANCORP | Auburn National vs. Affinity Bancshares | Auburn National vs. Southern California Bancorp |
| Texas Capital vs. Heartland Financial USA | Texas Capital vs. Heritage Commerce Corp | Texas Capital vs. Business First Bancshares | Texas Capital vs. German American 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |