Correlation Between Business First and LINKBANCORP
Can any of the company-specific risk be diversified away by investing in both Business First and LINKBANCORP 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 Business First and LINKBANCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Business First Bancshares and LINKBANCORP, you can compare the effects of market volatilities on Business First and LINKBANCORP 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 Business First with a short position of LINKBANCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Business First and LINKBANCORP.
Diversification Opportunities for Business First and LINKBANCORP
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Business and LINKBANCORP is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Business First Bancshares and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP and Business First 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 Business First Bancshares are associated (or correlated) with LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of Business First i.e., Business First and LINKBANCORP go up and down completely randomly.
Pair Corralation between Business First and LINKBANCORP
Given the investment horizon of 90 days Business First is expected to generate 1.2 times less return on investment than LINKBANCORP. In addition to that, Business First is 1.22 times more volatile than LINKBANCORP. It trades about 0.06 of its total potential returns per unit of risk. LINKBANCORP is currently generating about 0.09 per unit of volatility. If you would invest 608.00 in LINKBANCORP on November 2, 2024 and sell it today you would earn a total of 104.00 from holding LINKBANCORP or generate 17.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Business First Bancshares vs. LINKBANCORP
Performance |
| Timeline |
| Business First Bancshares |
| LINKBANCORP |
Business First and LINKBANCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Business First and LINKBANCORP
The main advantage of trading using opposite Business First and LINKBANCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Business First position performs unexpectedly, LINKBANCORP 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 LINKBANCORP will offset losses from the drop in LINKBANCORP's long position.| Business First vs. First Community | Business First vs. Community West Bancshares | Business First vs. First Financial Northwest | Business First vs. First Northwest Bancorp |
| LINKBANCORP vs. Home Federal Bancorp | LINKBANCORP vs. Lake Shore Bancorp | LINKBANCORP vs. Community West Bancshares | LINKBANCORP vs. Magyar 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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