Correlation Between Business First and Peapack Gladstone
Can any of the company-specific risk be diversified away by investing in both Business First and Peapack Gladstone 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 Peapack Gladstone 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 Peapack Gladstone Financial, you can compare the effects of market volatilities on Business First and Peapack Gladstone 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 Peapack Gladstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Business First and Peapack Gladstone.
Diversification Opportunities for Business First and Peapack Gladstone
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Business and Peapack is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Business First Bancshares and Peapack Gladstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peapack Gladstone 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 Peapack Gladstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peapack Gladstone has no effect on the direction of Business First i.e., Business First and Peapack Gladstone go up and down completely randomly.
Pair Corralation between Business First and Peapack Gladstone
Given the investment horizon of 90 days Business First Bancshares is expected to generate 0.86 times more return on investment than Peapack Gladstone. However, Business First Bancshares is 1.16 times less risky than Peapack Gladstone. It trades about 0.05 of its potential returns per unit of risk. Peapack Gladstone Financial is currently generating about 0.04 per unit of risk. If you would invest 2,176 in Business First Bancshares on November 9, 2024 and sell it today you would earn a total of 620.00 from holding Business First Bancshares or generate 28.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Business First Bancshares vs. Peapack Gladstone Financial
Performance |
| Timeline |
| Business First Bancshares |
| Peapack Gladstone |
Business First and Peapack Gladstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Business First and Peapack Gladstone
The main advantage of trading using opposite Business First and Peapack Gladstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Business First position performs unexpectedly, Peapack Gladstone 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 Peapack Gladstone will offset losses from the drop in Peapack Gladstone'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 |
| Peapack Gladstone vs. Sound Financial Bancorp | Peapack Gladstone vs. Finward Bancorp | Peapack Gladstone vs. Franklin Financial Services | Peapack Gladstone vs. Community West Bancshares |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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