Correlation Between Banco De and Lake Shore
Can any of the company-specific risk be diversified away by investing in both Banco De and Lake Shore 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 Banco De and Lake Shore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco De Chile and Lake Shore Bancorp, you can compare the effects of market volatilities on Banco De and Lake Shore 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 Banco De with a short position of Lake Shore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and Lake Shore.
Diversification Opportunities for Banco De and Lake Shore
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and Lake is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Banco De Chile and Lake Shore Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Shore Bancorp and Banco De 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 Banco De Chile are associated (or correlated) with Lake Shore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Shore Bancorp has no effect on the direction of Banco De i.e., Banco De and Lake Shore go up and down completely randomly.
Pair Corralation between Banco De and Lake Shore
Considering the 90-day investment horizon Banco De is expected to generate 2.12 times less return on investment than Lake Shore. But when comparing it to its historical volatility, Banco De Chile is 1.45 times less risky than Lake Shore. It trades about 0.04 of its potential returns per unit of risk. Lake Shore Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,112 in Lake Shore Bancorp on September 1, 2024 and sell it today you would earn a total of 234.00 from holding Lake Shore Bancorp or generate 21.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.12% |
| Values | Daily Returns |
Banco De Chile vs. Lake Shore Bancorp
Performance |
| Timeline |
| Banco De Chile |
| Lake Shore Bancorp |
Banco De and Lake Shore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco De and Lake Shore
The main advantage of trading using opposite Banco De and Lake Shore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco De position performs unexpectedly, Lake Shore 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 Lake Shore will offset losses from the drop in Lake Shore's long position.| Banco De vs. Banco Santander Brasil | Banco De vs. CrossFirst Bankshares | Banco De vs. Banco Bradesco SA | Banco De vs. CF Bankshares |
| Lake Shore vs. Affinity Bancshares | Lake Shore vs. Southern California Bancorp | Lake Shore vs. Auburn National Bancorporation | Lake Shore vs. BayCom Corp |
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.
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