Correlation Between BEO Bancorp and 1st Colonial
Can any of the company-specific risk be diversified away by investing in both BEO Bancorp and 1st Colonial 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 BEO Bancorp and 1st Colonial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BEO Bancorp and 1st Colonial Bancorp, you can compare the effects of market volatilities on BEO Bancorp and 1st Colonial 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 BEO Bancorp with a short position of 1st Colonial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEO Bancorp and 1st Colonial.
Diversification Opportunities for BEO Bancorp and 1st Colonial
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BEO and 1st is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding BEO Bancorp and 1st Colonial Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Colonial Bancorp and BEO 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 BEO Bancorp are associated (or correlated) with 1st Colonial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Colonial Bancorp has no effect on the direction of BEO Bancorp i.e., BEO Bancorp and 1st Colonial go up and down completely randomly.
Pair Corralation between BEO Bancorp and 1st Colonial
Given the investment horizon of 90 days BEO Bancorp is expected to generate 1.19 times more return on investment than 1st Colonial. However, BEO Bancorp is 1.19 times more volatile than 1st Colonial Bancorp. It trades about 0.12 of its potential returns per unit of risk. 1st Colonial Bancorp is currently generating about 0.08 per unit of risk. If you would invest 5,400 in BEO Bancorp on August 25, 2024 and sell it today you would earn a total of 2,116 from holding BEO Bancorp or generate 39.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BEO Bancorp vs. 1st Colonial Bancorp
Performance |
| Timeline |
| BEO Bancorp |
| 1st Colonial Bancorp |
BEO Bancorp and 1st Colonial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BEO Bancorp and 1st Colonial
The main advantage of trading using opposite BEO Bancorp and 1st Colonial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BEO Bancorp position performs unexpectedly, 1st Colonial 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 1st Colonial will offset losses from the drop in 1st Colonial's long position.| BEO Bancorp vs. CCSB Financial Corp | BEO Bancorp vs. Delhi Bank Corp | BEO Bancorp vs. First Community Financial | BEO Bancorp vs. First Community |
| 1st Colonial vs. CCSB Financial Corp | 1st Colonial vs. Bank of Utica | 1st Colonial vs. First Community Financial | 1st Colonial vs. BEO 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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