Correlation Between BCB Bancorp and Black Hills
Can any of the company-specific risk be diversified away by investing in both BCB Bancorp and Black Hills 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 BCB Bancorp and Black Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCB Bancorp and Black Hills, you can compare the effects of market volatilities on BCB Bancorp and Black Hills 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 BCB Bancorp with a short position of Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCB Bancorp and Black Hills.
Diversification Opportunities for BCB Bancorp and Black Hills
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BCB and Black is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BCB Bancorp and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and BCB 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 BCB Bancorp are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of BCB Bancorp i.e., BCB Bancorp and Black Hills go up and down completely randomly.
Pair Corralation between BCB Bancorp and Black Hills
Given the investment horizon of 90 days BCB Bancorp is expected to generate 1.43 times more return on investment than Black Hills. However, BCB Bancorp is 1.43 times more volatile than Black Hills. It trades about 0.3 of its potential returns per unit of risk. Black Hills is currently generating about 0.25 per unit of risk. If you would invest 1,191 in BCB Bancorp on August 27, 2024 and sell it today you would earn a total of 159.00 from holding BCB Bancorp or generate 13.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCB Bancorp vs. Black Hills
Performance |
| Timeline |
| BCB Bancorp |
| Black Hills |
BCB Bancorp and Black Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCB Bancorp and Black Hills
The main advantage of trading using opposite BCB Bancorp and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCB Bancorp position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.| BCB Bancorp vs. Provident Financial Services | BCB Bancorp vs. First Mid Illinois | BCB Bancorp vs. ConnectOne Bancorp | BCB Bancorp vs. Finward Bancorp |
| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |