Correlation Between Banc Of and Tectonic Financial
Can any of the company-specific risk be diversified away by investing in both Banc Of and Tectonic Financial 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 Tectonic Financial 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 Tectonic Financial PR, you can compare the effects of market volatilities on Banc Of and Tectonic Financial 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 Tectonic Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banc Of and Tectonic Financial.
Diversification Opportunities for Banc Of and Tectonic Financial
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banc and Tectonic is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Banc of California and Tectonic Financial PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic Financial 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 Tectonic Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Financial has no effect on the direction of Banc Of i.e., Banc Of and Tectonic Financial go up and down completely randomly.
Pair Corralation between Banc Of and Tectonic Financial
Assuming the 90 days trading horizon Banc of California is expected to generate 0.5 times more return on investment than Tectonic Financial. However, Banc of California is 2.02 times less risky than Tectonic Financial. It trades about 0.35 of its potential returns per unit of risk. Tectonic Financial PR is currently generating about 0.05 per unit of risk. If you would invest 2,453 in Banc of California on November 2, 2024 and sell it today you would earn a total of 94.00 from holding Banc of California or generate 3.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banc of California vs. Tectonic Financial PR
Performance |
| Timeline |
| Banc of California |
| Tectonic Financial |
Banc Of and Tectonic Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banc Of and Tectonic Financial
The main advantage of trading using opposite Banc Of and Tectonic Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banc Of position performs unexpectedly, Tectonic Financial 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 Tectonic Financial will offset losses from the drop in Tectonic Financial's long position.| Banc Of vs. Ameriprise Financial | Banc Of vs. Arrow Electronics | Banc Of vs. Cedar Realty Trust | Banc Of vs. Sonos Inc |
| Tectonic Financial vs. First Guaranty Bancshares | Tectonic Financial vs. First Merchants | Tectonic Financial vs. Bridgewater Bancshares Depositary | Tectonic Financial vs. Absa Group Limited |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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