Correlation Between Banc Of and Bank of the
Can any of the company-specific risk be diversified away by investing in both Banc Of and Bank of the 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 Banc Of and Bank of the into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banc of California and Bank of the, you can compare the effects of market volatilities on Banc Of and Bank of the 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 Banc Of with a short position of Bank of the. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banc Of and Bank of the.
Diversification Opportunities for Banc Of and Bank of the
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Banc and Bank is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Banc of California and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the and Banc Of 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 Banc of California are associated (or correlated) with Bank of the. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of the has no effect on the direction of Banc Of i.e., Banc Of and Bank of the go up and down completely randomly.
Pair Corralation between Banc Of and Bank of the
Assuming the 90 days trading horizon Banc Of is expected to generate 1.4 times less return on investment than Bank of the. But when comparing it to its historical volatility, Banc of California is 3.48 times less risky than Bank of the. It trades about 0.1 of its potential returns per unit of risk. Bank of the is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,155 in Bank of the on November 5, 2024 and sell it today you would earn a total of 235.00 from holding Bank of the or generate 20.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banc of California vs. Bank of the
Performance |
| Timeline |
| Banc of California |
| Bank of the |
Banc Of and Bank of the Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banc Of and Bank of the
The main advantage of trading using opposite Banc Of and Bank of the positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banc Of position performs unexpectedly, Bank of the 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 Bank of the will offset losses from the drop in Bank of the's long position.| Banc Of vs. Axos Financial | Banc Of vs. Byline Bancorp | Banc Of vs. KB Financial Group | Banc Of vs. Nu Holdings |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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